Image source: Instagram @builder.ai
An AI prodigy crashes
Just a few years ago, Builder.ai was considered one of the hottest AI start-ups in the world. The idea was simple and ingenious: a platform that would allow even non-experts to create apps and websites at the touch of a button - thanks to artificial intelligence. Microsoft and Softbank invested almost 450 million dollars together. At times, the company was worth over a billion dollars - a real "unicorn".
But now comes the bitter awakening: Builder.ai is on the verge of bankruptcy. According to Techcrunch, the company is already looking for an insolvency administrator. What went wrong? The answer: a mixture of exaggerated promises, internal scandals and inflated figures.
AI? More like human manual labor
The biggest bang came years ago: Builder.ai - back then still under the name Engineer.ai - had advertised its ability to create apps fully automatically using AI. In reality, most of it was classic programming work - by real people, not machines. This was revealed in a report by the Wall Street Journal.
At the time, founder Sachin Dev Duggal tried to win back trust by changing the name. But the doubts remained. Despite new PR strategies and a relaunch as Builder.ai, the company was unable to regain the trust of many customers. Project delays, inadequate software deliveries and an authoritarian management style were repeatedly criticized.
Money laundering, fake figures and the big crash
In February 2025, Duggal resigned as CEO - officially due to a "strategic realignment". In reality, however, the reason may have been money laundering allegations from India and internal pressure. The new boss, Manpreet Ratia, immediately had the books audited. The result: Builder.ai is said to have manipulated sales figures and artificially inflated turnover - in some cases by more than 20 percent.
The next bad news came in April 2025: 270 out of 770 employees lost their jobs. The sales forecasts were drastically revised downwards. And now insolvency.
What remains of the AI dream?
Builder.ai was not just a startup that failed. It is a prime example of how a good idea can turn into a billion-dollar castle in the air if technology, ethics and reality do not fit together.
The company remains cautious in its communication: it wants to "look after its employees and partners" and is examining whether parts of the company can survive. A complete restart on a small scale is not ruled out. But trust is gone.
No AI startup is too big to fail
Builder.ai shows once again that not all that glitters is gold, even in the artificial intelligence gold rush. When investors believe more in visions than in products, the result is not a technology of the future - but a risky hype.
The real problem: there is often a lack of transparency, control and responsibility. If even a Microsoft investment does not prevent figures from being manipulated and projects from being whitewashed, the industry urgently needs a reality check. AI needs rules - and start-ups need to be grounded. Otherwise, innovation too often ends in insolvency.
