The tech world is shocked as Builder.ai, once a highly valued AI startup, faces bankruptcy amid revelations that its AI was actually a team of Indian workers.
The International Business Times reports that the once-celebrated British startup Builder.ai, valued at $1.5 billion and backed by prominent investors such as Microsoft and the Qatar Investment Authority, has filed for bankruptcy protection. The company’s downfall began when a key lender, Viola Credit, withdrew $37 million from its accounts, leaving a mere $5 million in restricted funds and crippling operations across five countries.
Builder.ai, founded in 2016, presented itself as a cutting-edge platform that used artificial intelligence to allow businesses to create custom applications with minimal coding. The company had raised over $450 million in total funding from high-profile investors, including Microsoft, the World Bank’s IFC, Jeffrey Katzenberg’s WndrCo, Lakestar, and SoftBank’s DeepCore incubator.
However, the startup’s AI facade began to crumble when former employees raised concerns about inflated sales performance during investor briefings. These allegations led to a series of events, including investor apprehension, internal management changes, and a loss of confidence in the company.
The most damaging revelation came from Linas Beliūnas, Director of the financial company Zero Hash, who exposed that Builder.ai lacked true AI capabilities. Instead, the company relied on a group of Indian developers who pretended to be AI bots writing code. Beliūnas also highlighted that the company’s founder, Sachin Dev Duggal, had reportedly presented false revenue figures to investors, managing to sustain this deception for eight years.
This type of fakery is known as “AI washing,” where the work of humans is passed off as that of AI. As Breitbart News previously reported:
BBC News reports that the phenomenon of “AI washing” has been gaining attention in recent months, as more companies claim to use AI in their products and services. The term, a play on “green washing,” refers to companies making over-inflated claims about their use of AI. This can take several forms, such as claiming to use AI when using less-sophisticated computing, overstating the efficacy of AI over existing techniques, or suggesting that AI solutions are fully operational when they are not.
One high-profile example is Amazon’s “Just Walk Out” technology, which claims to use AI to enable customers at many of its Amazon Fresh and Amazon Go shops to simply pick their items and leave, with the AI using sensors to determine what they have chosen and automatically billing them. However, reports earlier this year questioned the extent of AI’s role in the system, suggesting that around 1,000 workers in India were needed to manually check almost three quarters of the transactions. Amazon denied these reports, stating that the Indian workers were simply reviewing the system.
The Qatar Investment Authority (QIA) emerged as one of the biggest losers in this saga, having led a $250 million funding round just two years ago. The insolvency proceedings at Builder.ai reflect a growing trend of instability among AI startups, many of which have expanded rapidly based on hype without robust financial oversight or genuinely unique products.
As a result of the lender’s actions and the revelations about the company’s operations, Builder.ai’s CEO, Manpreet Ratia, who took over from founder Sachin Dev Duggal earlier this year, has stated that most of the workforce has been laid off. The company is now commencing bankruptcy filings in its operational territories, including the UK, US, UAE, Singapore, and India.
Read more at the International Business Times here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
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