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- 🤯 The $1.5B Unicorn That Faked Its Way to Bankruptcy
🤯 The $1.5B Unicorn That Faked Its Way to Bankruptcy
How Builder.ai faked AI with 700 Indian engineers + inflated revenue (and got away with it for 9 years)
Admond Lee
June 08, 2025
Hey Founders,
Welcome to The Runway Ventures — a weekly newsletter where I deep dive into failed startup stories to help you become the top 1% founder by learning from their mistakes with actionable insights.
Today’s story is about how Builder.ai faked AI with 700 Indian engineers and inflated its revenue for 9 years. Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → Builder.ai
⚠️ 2 Mistakes → Fake it till you make it
🧠 3 Lessons Learned → Underpromise & overdeliver your tech
🔗 The Runway Insights → The complete playbook for building profitable companies in the AI age
💰 Southeast Asia Funding Radar → Syfe raises $53M in expanded Series C round for regional expansion
☠️ 1 Failed Startup: Builder.ai
🚀 The Rise of Builder.ai
🇬🇧 Co-founded in London by Indian-born serial-entrepreneur Sachin Dev Duggal (with partner Saurabh Dhoot) in 2016, Builder.ai promised to democratise app development.
Their pitch? Making building software “as easy as ordering pizza”! 🍕
The Problem — 🧑🏻💻 Non-technical people with great ideas often struggled to build apps without coding skills or find good developers to build apps.
The Solution — ⚡️ Builder.ai provided an AI-powered platform that would let anyone describe an app idea in plain language and immediately get a fixed-price quote and timeline.
Users could chat with its virtual assistant “Natasha” to scope the app.
Natasha would then pick from a library of hundreds of reusable “Lego-block” features (think user login, chat modules, payment gateways, etc.) and hand you a turnkey project plan.
Internally the team worked with hundreds of human engineers, but the marketing buzz was all about “human-assisted AI” and zero coding needed.
🤦🏻♂️ The marketing pitch made Builder.ai viral. But it was also this marketing pitch that killed Builder.ai (read more below).
Users could also use popular apps as templates, then add or remove features as needed.
The company even claimed its system could build software 6x faster and 70% cheaper than a traditional dev team.
 Sachin Dev Dunggal (co-founder of Builder.ai) | I mean… Who doesn’t like revolutionary products? So investors kept throwing money at them. 💰 The company raised a massive $29.5 million Series A in 2018, led by Lakestar and Jungle Ventures, with participation from SoftBank's DeepCore. |
But that was just the beginning.
Over the years, Builder.ai raised over $450 million in funding from heavyweight investors including Microsoft Corp. and the Qatar Investment Authority, hitting a unicorn valuation of $1.5 billion.
📈 The growth? It was insane. Builder.ai was crushing it:
By 2023, the company was claiming 300% year-over-year growth.
They were selling over 40,000 features to customers annually.
Fast Company even named them the Top 3 Most Innovative AI companies globally in 2023 (alongside OpenAI and DeepMind).
At its peak, Builder.ai seemed like the future of software.
📉 The Fall of Builder.ai
BUT (yes, a big BUT)…
The future can be faked.
🤔 After Builder.ai’s management had slashed its target of revenue forecasts by 25%, internal auditors were brought in.
Guess what?
🤷🏻♂️ The tech didn’t match the hype and the company has been cooking its books:
Faked AI with 700 Indian engineers
Inflated revenue by 300% on multiple occasions
📌 Here’s what happened to Builder.ai:
The business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position.
🎭 Fake it till you make it
2016 — Launched as Engineer.ai.
Sachin Dev Duggal and Saurabh Dhoot founded the company in London to make app development “as easy as ordering pizza”.
Nov 2018 — 💰 Raised $29.5M (Series A) (Lakestar/Jungle Ventures) at Web Summit. The platform was an invite‑only beta (London/LA) with its AI+crowd model.
2019 — (Early Warning ⚠️) Wall Street Journal exposed that the company was using human developers instead of AI to write code.
Why investors still ignored this early warning?
Oct 2019 — Rebranded from Engineer.ai to Builder.ai.
Nov 2019 — Unveiled Builder Now – a drag-and-drop app prototyping tool – at Slush in Helsinki.
This let founders instantly sketch apps (selecting things like “ride‑share” or “meditation app”) and see a cost/timeline.
Mid 2021 — 💰Raised ~$65 million (Series B) from top investors, including WndrCo and the World Bank’s IFC.
Mar 2022 — 💰Closed a $100M (Series C) led by Insight Partners, bringing the total funding to ~$195M.
By then Builder.ai claimed >300% annual revenue growth and 450 employees.
May 2023 — 💰Announced a huge $250M (Series D) led by Qatar Investment Authority. Microsoft also made a strategic investment.
Total money raised topped $450M and the company achieved a $1.5B valuation.
🤖 Faked AI + Inflated Revenue = DEAD
Feb 2025 — ⚠️ Founder Sachin Duggal resigned as CEO, replaced by Manpreet Ratia (executive of Jungle Ventures) to intervene and rescue the company.
But it was too late. The damage was done.
The board was trimmed in a governance shake‑up.
Mar 2025 — 🚨🚨 Facing scepticism from investors, Builder.ai cut its 2024 revenue guidance and hired external auditors amid accusations of inflated sales numbers.
Booked $220M in 2024 — truth was $50M.
🤯 Bloomberg reported that Builder.ai engaged in fake invoice exchanges (round-tripping) with Verse (Indian firm) between 2021 and 2024 to inflate revenue figures presented to investors.
According to the report, the 2 companies routinely billed each other for similar amounts without any actual services or products exchanged (wow!).
May 2025 — A creditor (Viola Credit) froze most of Builder.ai’s cash, seizing $37M due to debt defaults.
With only $5M left, the company began massive layoffs.
Days later, Builder.ai officially filed for bankruptcy in US Delaware court.
Administrators were appointed to wind down or sell off remaining assets.
Official announcement by Builder.ai to enter into insolvency proceedings
So, The Wall Street Journal was right when it exposed the company in 2019 that most of its coding work was being carried out by human engineers, not AI as claimed by the company.
🤦🏻♂️ But sadly, investors ignored the early warning signs.
What makes this story even more tragic is that the original problem Builder.ai identified — making app development accessible to non-technical people — was actually a real problem and market need.
There are legitimate companies solving this problem today, including Lovable, Bolt, v0 and Replit. But instead of focusing on building real solutions, Builder.ai chose the path of deception, ultimately destroying hundreds of millions of dollars in investor money and crushing the dreams of customers who believed in their vision.
Want to learn more about Builder.ai’s downfall?
⚠️ 2 Mistakes
Mistake 1: Fake it till you make it
Builder.ai's fundamental mistake wasn't just overselling their capabilities — it was building their entire business model on a lie.
🧑🏻💻🧑🏻💻🧑🏻💻 While marketing their platform as powered by revolutionary AI that could build apps "as easy as ordering pizza", the company was actually relying on a network of ~700 Indian engineers to manually code applications.
🤑 Not just that, the company also inflated revenue figures to maintain investor confidence and justify their astronomical valuation by:
Reporting $220 million in revenue for 2024 when the actual figure was closer to $50 million — a staggering 340% inflation.
This wasn't simple accounting creativity as it involved elaborate round-tripping schemes where Builder.ai would exchange fake invoices with partner companies like VerSe, creating the appearance of legitimate business transactions without any real value exchange.
Writing Builder.ai also reminds me of how eFishery inflated its revenue 4.8x and went unnoticed for 6 years. INSANE.
Mistake 2: Lack of founder integrity
While others may blame investors who didn’t do thorough due diligence before investing in the company, it still boils down to one question, “Why did it happen?”.
🤦🏻♂️ My best guess? Lack of founder integrity.
Founder integrity isn’t about being “nice”. It’s about ruthless honesty when no one’s watching.
Even worse, Sachin (co-founder of Builder.ai) had 9 years to fix the problems. Instead, the company had been engaging in fake invoice exchanges (round-tripping) with Verse (Indian firm) between 2021 and 2024 to inflate revenue figures presented to investors.
Lack of founder integrity → Fake it till you make it → Raised tons of money → More fraudulent activities → Got exposed → Everything collapsed
🫡 Doing the right thing is always the right thing to do.
🧠 3 Lessons Learned
Lesson 1: Underpromise & overdeliver your tech
Builder.ai’s “order-pizza” pitch went viral… but behind the scenes they had 700 engineers manually coding. Investors loved the sizzle, not the steak — and eventually realised the pizza was all topping with no dough.
🌮 Key Takeaways:
🔥 Hype ≠ Product
Honesty is everything.
Be radically transparent about what’s automated, what’s human-powered, and what’s still on the roadmap.
Don’t fudge your numbers — audits and due diligence will catch up with you, and trust is impossible to rebuild once lost.
OpenAI and Replit all grew by shipping real, working products and being clear about their limitations. They didn’t claim to have solved AGI on day one — they let results speak for themselves.
Lesson 2: Integrity is non-negotiable
Builder.ai’s round-tripping scam with VerSe and cooked books wasn’t a one-off slip; it was a culture of “fake it till you make it” run amok.
🌮 Key Takeaways:
🫡 Lead with brutal honesty
Acknowledge weaknesses, failures, and gaps early.
"We haven't solved X yet, but here's our plan" is powerful.
If founders cut corners, lie, or prioritise perception over reality, that poison seeps into every decision, hire, and investor pitch.
It creates a toxic environment where ethical people leave and unethical behaviour flourishes. It destroys morale and ultimately, the company.
🤝🏻 Build accountability
Even if you’re pre-seed, get a third party to verify your codebase claims or financials and share a summary.
Have independent board members, auditors, or advisors who aren't afraid to challenge you.
Create safe channels for internal feedback.
Lesson 3: Track your unit economics (not just valuation)
Let’s be real — chasing unicorn status is fun. Headlines, VC parties, and billion-dollar valuations are addictive. But as Builder.ai’s implosion shows, if you’re not obsessively tracking your unit economics, you’re building your startup on a house of cards.
And that’s not what you want.
🌮 Key Takeaways:
💵 LTV:CAC Ratio
Aim for 3:1 or higher
If you spend $100 to acquire a customer (CAC), they must generate at least $300 in profit (LTV).
Builder.ai’s fake revenue hid a likely negative ratio.
🤑 Gross Margin %
Gross Margin % = (Revenue - COGS) / Revenue
Software should be 70-90%.
Builder.ai’s human-heavy model likely had margins <20% (if positive at all).
📈 Track cohort metrics religiously
Don’t just look at total revenue.
Analyse:
Month 0: CAC for Jan sign-ups.
Month 3: Revenue/retention from Jan cohort.
Month 12: LTV of Jan cohort.
🔗 The Runway Insights
The complete playbook for building profitable companies in the AI age (Link)
De-stigmatising mental health in entrepreneurship (Link)
How much should you invest in Customer Success? (Link)
Great Founder Trait: Clarify of Thought (Link)
The state of B2B monetisation in 2025 (Link)
To grow faster, think smaller (Link)
💰 Southeast Asia Funding Radar
Syfe raises $53M in expanded Series C round for regional expansion (Link)
Truely raises additional $2M to scale global eSIM connectivity (Link)
Decentro bags $3.5M (Series B) to grow its footprint in the Indian financial sector (Link)
Stride Green raises $3.5M (Seed) to make clean energy accessible across India (Link)
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That’s all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
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