AI Startup Implodes: Exposed as 700-Engineer Operation

The AI bubble has burst for one company after a shocking revelation. Builder.ai, a London-based firm valued at $1.5 billion and backed by Microsoft, has filed for bankruptcy following the exposure of its “AI-powered” app-building service as being primarily driven by over 700 engineers in India.

From Neural Network to Human Network

Builder.ai, known for its “Natasha” service, promised rapid app development through artificial intelligence. However, reports indicate that the company’s core operations relied heavily on manual labor, with limited AI involvement beyond basic clerical tasks.

According to Binance, the AI facade crumbled after eight years, culminating in a May 2025 exposure. Shortly after, Builder.ai announced its insolvency, citing “historic challenges and past decisions” that crippled its finances.

Dubious Deals and Revenue Inflation?

Bloomberg reports suggest further complications. Documents reveal alleged collaborations between Builder.ai and VerSe, an Indian social media startup, to artificially inflate sales figures through reciprocal billing practices between 2021 and 2024. VerSe vehemently denies any wrongdoing, dismissing the accusations as “baseless and false.”

Collateral Damage: A Case of Mistaken Identity

The controversy has had an unexpected impact on Builder.io, a similarly named software company utilizing genuine AI tools. Builder.io’s CEO has clarified their lack of affiliation with the scandal-ridden Builder.ai to avoid confusion and reputational damage.

The Builder.ai saga serves as a cautionary tale, highlighting the importance of transparency and ethical practices in the rapidly evolving AI landscape. As investors and consumers grow more discerning, companies claiming AI innovation face increasing scrutiny.