--- title: "A Billion Dollar AI Startup Just Collapsed Spectacularly" description: "Facing mounting debts, angry investors and very little revenue, the once billion-dollar Builder.ai has filed for bankruptcy." date: "2025-05-21" modified: "2025-05-21" authors: - name: "Joe Wilkins" job_title: "Correspondent" link: "https://futurism.com/authors/jwilkins" url: "https://futurism.com/ai-startup-builderai-collapse" categories: - "Artificial Intelligence" tags: - "microsoft" - "qatar" - "Startups" --- # A Billion Dollar AI Startup Just Collapsed Spectacularly ![Facing mounting debts, angry investors and very little revenue, the once billion-dollar Builder.ai has filed for bankruptcy.]() *\Image: Ramsey Cardy / Sportsfile for Web Summit via Getty / Futurism\* As the artificial intelligence industry struggles with ever-rising costs — not to mention a steady uptick in [hallucinations]() — investors are getting impatient. One investment firm went as far as seizing $37 million from accounts owned by Builder.ai, a UK-based AI startup meant to make developing apps "as easy as ordering a pizza." That left the company with just $5 million, [according to *Bloomberg*]()*,* prompting its senior lenders to place it into default. With very little cash left to keep the ship afloat, CEO Manpreet Ratia closed the startup's doors and filed for bankruptcy. Builder.ai was previously one of the most well-funded tech startups in the game, with over [$450 million]() in backing from sources as big as tech giant Microsoft, Japanese investment firm SoftBank, and the Qatari government's sovereign wealth fund. That gave it a valuation worth over $1 billion, [drawing comparisons]() to Mark Zuckerberg's Meta. Ratia told [the *Financial Times*]() the startup was "unable to recover from historic challenges and past decisions that placed significant strain on its financial position," adding that he had been running the business with "zero dollars" in its US and UK accounts. The CEO took over for Builder.ai's founder and "chief wizard" [Sachin Dev Duggal]() in March, after the latter saddled the business with hundreds of millions worth of debt while burning through its dwindling cash fund, according to *FT*. Duggal was likewise embattled in a [high-stakes legal probe]() by authorities in India, who named him a suspect in an alleged money laundering case. For his part, Duggal [denied the accusations](), saying he was simply a witness, though [*FT* has also reported]() Duggal heavily relied on the services of an auditor with whom he has close personal ties. It's not known what, exactly, pushed the first domino. Viola Credit, the company that seized Builder.ai's coffers, has yet to give an explanation, though we can probably guess they saw the writing on the wall and simply hoped to pad their losses. It's a big moment for the AI industry, as the pressure grows for AI companies to actually come out with a usable — not to mention sustainable — product. Though AI companies accounted for [40 percent]() of the money raised by US startups last year, the vast majority of them have yet to turn a profit. Many AI startups struggle to find any [consistent revenue stream]() at all beyond tech-crazed venture capitalists, and a not insignificant number have been caught [misleading investors]() about their AI's capabilities to keep the cash flowing. Case in point, after Ratia took the helm back in March, Builder.ai lowered its [revenue estimates]() for the last half of 2024 by 25 percent — a major blow for the much-hyped company. The startup was likewise caught trying to pass off [human-built software]() as AI back in 2019. As auditors and journalists sift through the rubble to find out what went wrong, now makes as good a time as any to take a [temperature check]() on unchecked AI hype. **More on AI startups:** [*Company Regrets Replacing All Those Pesky Human Workers With AI, Just Wants Its Humans Back*]() ## Author At Futurism, I focus on the intersection of technology and power — examining the economics, history, and politics behind today’s dystopian headlines. As a writer, I’m interested in topics ranging from AI’s impact on labor to startups nobody asked for. My prior work includes bylines in Jacobin, Verso, and Blue Labyrinths. My work for Futurism has been cited by publications including Forbes, The Guardian, MIT Technology Review, Time, The Nation, Mother Jones, The Verge, and Wired. I grew up in Michigan, attending Central Michigan University as well as Ball State University, where I earned a master of music. I now live in Brooklyn with my girlfriend and our cat Ziti. On weekends, you can find me hunched over a cold pint arguing geopolitics with the other transplants. ### Author social links [Bluesky]()