Microsoft-backed Builder.ai collapses after revenue probe, debt default
LONDON, UNITED KINGDOM — The AI software startup Builder.ai, once hailed as one of the United Kingdom’s most promising tech ventures, has entered insolvency proceedings.
A company spokesperson said the decision comes after months of financial turmoil and the failure to recover from “historic challenges and past decisions that placed significant strain” on its finances.
Founded as Engineer.ai, Builder.ai promised to make app creation “as easy as ordering pizza,” leveraging AI to simplify development. But internal investigations and financial inconsistencies have now derailed the Microsoft-backed unicorn, which raised more than $500 million from investors including Microsoft and Qatar’s sovereign wealth fund.
Revenue estimates collapse amid investigation
Builder.ai’s downfall accelerated after it revised its 2024 revenue forecast from $220 million to just $55 million, while its 2023 reported revenue of $180 million was slashed to $45 million.
The sharp downgrades prompted lenders to call a default, triggering insolvency proceedings.
Behind the scenes, the company faced allegations of inflated sales and questionable revenue recognition. A law firm-led internal probe focused on “resellers” — third-party sellers primarily in the Middle East — found that some may not have been legitimate, raising doubts over whether actual customer transactions had taken place.
“The business has been unable to recover,” the company stated, adding that it would work with administrators to “support our employees, customers, and partners” during the transition.
Leadership turmoil and lender intervention
Earlier this year, founder Sachin Dev Duggal stepped down as CEO, although he retained a board seat and the title of “chief wizard.” The company also replaced its chief revenue officer and appointed Manpreet Ratia as the new CEO in February.
In October, Builder.ai took a $50 million loan from a syndicate led by Viola Credit, Atempo Growth, and Cadma Capital Partners — the last of which is backed by Apollo Global Management. This lender group ultimately seized company funds earlier this month, precipitating the collapse.
