AI Startup’s Billion-Dollar Valuation Crumbles as Engineers Unmasked as ‘Bots’

A startup that claimed to be entirely driven by artificial intelligence has failed after being exposed for employing staff who were “pretending to be bots”.

Technology experts were left astonished to discover that Builder.ai, a $1.5 billion artificial intelligence firm, has been functioning under an AI guise since it was founded in 2016.

The British startup was initially recognized as an innovative platform, enabling companies to develop applications with minimal coding by using what was believed to be AI.

However, it has now come to light that the coding was actually performed by approximately 700 human developers and programmers in India, who were instructed to behave as AI bots.

Builder.ai had formed collaborations with Microsoft and received a $250 million investment from the Qatar Investment Authority, as reported by International Business Times.

Overall, it raised over $450 million in funding from top investors, including Microsoft and the World Bank’s IFC, among others.

However, Builder.ai has now filed for bankruptcy protection and entered insolvency proceedings, as indicated in its LinkedIn statement last month.

According to Bloomberg, the firm faced a downturn after a significant lender, Viola Credit, which had provided a $50 million loan in 2023, withdrew $37 million from its accounts, leaving Builder.ai with only $5 million in restricted funds.

This action effectively hindered the company from meeting payroll obligations or sustaining its fundamental operations.

Less than two months ago, auditors were reportedly brought in to review the company’s financial records from the last two years after staff raised concerns that sales figures had been exaggerated during investor presentations.

Earlier this year, CEO Manpreet Ratia succeeded founder Sachin Dev Duggal and indicated that a significant number of the company’s staff had been terminated.

Subsequently, Linas Beliūnas, Director of the financial firm Zero Hash, discovered that Builder.ai was sorely missing its primary feature – any actual AI – as he found that a team of Indian developers was merely pretending to be bots to write the code.

“Incredible: a $1.5 billion AI startup has just failed, as it turns out their ‘AI backend’ was just Indian developers pretending to write code,” he stated on LinkedIn.

Beliūnas also claimed that Duggal “reported false revenue to investors”.

“Somehow, this company was able to maintain this deception for eight years,” he claimed.

“The Qatar Investment Authority (QIA) is among the biggest victims in this situation. They led a $250 million funding round two years ago,” Beliūnas added in his statement.

The news outlet reports that the company will now begin bankruptcy proceedings in its operational regions, including the US, UK, Singapore, UAE, and India.

Builder.ai’s statement also said: “Despite the relentless efforts of our current team and the exploration of every possible avenue, the company has been unable to recover from past challenges and decisions that have placed significant pressure on its financial situation.

“Our top priority is to support our employees, customers, and partners during this challenging period.

“We will collaborate closely with the appointed administrators to ensure an orderly process and to investigate all available options for parts of the business, wherever feasible.

“We want to extend our heartfelt thanks to our employees for their dedication and hard work, to our customers for their loyalty, and to our partners and suppliers for their support over the years.”