Microsoft-backed Builder.ai files for bankruptcy after AI found to rely on 700 Indian devs

Builder.ai, a London-based AI startup once valued at $1.5 billion, has filed for bankruptcy following allegations that its highly promoted AI platform, 'Natasha', was mainly powered by human labor. Investigations revealed that although Builder.ai marketed Natasha as an autonomous app-building system, more than 700 Indian engineers performed most of the coding manually, exposing a significant gap between the company's claims and its actual operations. Internal sources confirmed only basic clerical tasks had been automated by the platform, while real software development required human intervention.

Alongside the operational misrepresentations, Bloomberg reported that Builder.ai and VerSe, an Indian social media company, allegedly exchanged inflated invoices from 2021 to 2024 to artificially boost revenue. VerSe, however, rejected these allegations as “baseless and false,” according to co-founder Umang Bedi. Microsoft had previously invested $455 million in Builder.ai, highlighting the scale and reach of the company’s promise before its abrupt collapse.

Shortly afterward, the current CEO of the company, Manpreet Ratia, announced insolvency to staff and the dismissal of 100% of its workforce, citing no viable path to recovery. In a later LinkedIn statement, Builder.ai attributed the bankruptcy to historic challenges and past management decisions.