True Story Behind Builder.ai Crash

What Really Happened to the $1 Billion “No-Code” Unicorn?

Builder.ai – the AI-powered app development platform that promised to “democratize software creation” – has suffered a spectacular fall from grace in 2025. Here’s the inside story behind the crash of this once high-flying startup:

The House of Cards Begins to Shake (Early 2025)

Massive layoffs (40% of workforce) announced in February despite $250M Series D funding in 2023
Key executives including CTO and CFO abruptly depart
Customers begin complaining about unfinished projects and refund demands

The Breaking Point (May 2025)

Investors discover the company had been misrepresenting:
- Actual AI capabilities (most work done by human contractors)
- Customer numbers (inflated by 300%)
- Revenue recognition (counting demo projects as sales)
Lead investor SoftBank demands forensic audit
$120 million missing from corporate accounts

The Smoking Guns

The “AI” Was Mostly Human
- Investigation revealed 85% of delivered apps were built by underpaid developers in India and Eastern Europe
- “Natasha” AI was essentially an overglorified project management tool
Financial Shell Game
- Company was burning $18M/month while reporting “profitability”
- Creative accounting hid $47M in unpaid vendor bills
Founder’s Questionable Spending
- CEO Sachin Dev Duggal allegedly used company funds for:
  - $12M London penthouse
  - Private jet leases
  - Lavish “business development” parties

The Aftermath

Interpol warrant issued for Duggal (current whereabouts unknown)
Microsoft (major partner) files $75M fraud lawsuit
1,200+ small businesses left with half-built apps
Indian government opens money laundering probe

Why This Matters

Builder.ai’s collapse exposes deeper issues in the AI startup bubble:

Many “AI” companies are just outsourcing shops with good PR
Investor FOMO enabling reckless spending and fraud
Lack of technical due diligence in hot sectors

Final Thought: This wasn’t just a business failure – it was a calculated deception that crossed into alleged criminal territory. The fallout may lead to tighter regulations for AI startups seeking funding.