Builder.ai drastically Overstated Sales, Missing Targets by 300%
Builder.ai, once a shining star among AI start-ups, is now teetering on the brink of bankruptcy. The company, headquartered in the UK and operating in Singapore, had secured backing from tech giants like Microsoft and global investors including the Qatar Investment Authority. However, this success story quickly unraveled when financial inconsistencies came to light.
In 2024, Builder.ai sought an emergency loan and projected annual sales of US$220 million. However, actual revenue was closer to US$50 million—just a quarter of what had been claimed. This stark discrepancy became a key reason lenders, led by Israel’s Viola Credit, seized most of the company’s funds. The misrepresentation not only shocked investors but also ignited serious concerns about financial oversight within the organization.
Leadership Turmoil and Audits
By December 2024, red flags prompted Builder.ai’s board to investigate further. Founder and then-CEO Sachin Dev Duggal had returned seeking additional funding, raising suspicions. An internal review estimated revenue at about US$100 million, a figure later proven to be overly optimistic.
As the situation deteriorated, the board ousted Mr. Duggal in February and injected US$75 million to stabilize the company. They appointed Manpreet Ratia, from Singapore’s Jungle Ventures, as the new CEO. An independent audit was launched soon after. This audit confirmed the worst: Builder.ai’s actual revenue for 2024 had only reached US$50 million. In response, the creditor group froze the firm’s bank accounts, securing approximately US$37 million in remaining cash.
Lessons from a Cautionary Tale
Builder.ai’s collapse, now considered one of the largest in the AI sector since ChatGPT’s launch in 2022, highlights the volatility in the rapidly growing industry. Despite its promising platform, which helped businesses build apps quickly, financial mismanagement proved fatal.
In a letter dated May 20, the company admitted it could not recover from past decisions and financial strain. An administrator will now be appointed to oversee the bankruptcy process. The incident serves as a stark reminder for investors: in a booming market, due diligence remains crucial.
