Builder.ai, once a rising star in the artificial intelligence startup world, has entered insolvency after reports surfaced that its flagship AI technology never actually existed. Despite raising over $500 million from major backers including Microsoft, SoftBank and the Qatar Investment Authority, the company has laid off all staff and appointed administrators to manage its affairs.

The company, formerly known as Engineer.ai, claimed to use AI to help users build apps “as easy as ordering pizza.” In reality, reports suggest the service relied on large teams of human developers—mostly based in India—who manually completed client work while the company marketed the process as AI-powered.

At its peak, Builder.ai boasted a $1.3 billion valuation following a $250 million Series D round led by Qatar’s sovereign wealth fund. It promised revolutionary no-code and low-code app development, gained media attention through flashy TED talks, and positioned founder Sachin Dev Duggal as the poster child of Indian tech innovation.

But behind the scenes, the numbers didn’t add up. Internal audits reportedly showed that the company only earned $55 million in actual revenue in 2024, a far cry from the $220 million it had claimed. Whistleblowers further alleged that revenue was inflated, automation was fake, and the “AI backend” amounted to little more than humans pretending to be code-generating bots.

Following these revelations, investors froze $37 million of the remaining $50 million in company funds. Microsoft and Amazon are reportedly among the largest creditors, with $30 million and $85 million owed, respectively. The company could no longer pay employees, and the entire workforce has now been laid off.

Duggal quietly stepped down earlier this year, adopting the odd title of “Chief Wizard” before disappearing from the leadership spotlight. His departure came as lawsuits mounted in India, including allegations of loan fraud and money laundering. One cofounder is said to be under investigation.

The final blow came in May 2025, when the company officially filed for insolvency. In a statement, Builder.ai said it had “explored every possible option” but was unable to recover from “historic challenges and past decisions” that placed “significant strain” on its finances.

The company’s implosion marks one of the most high-profile collapses in the recent AI boom, and raises broader questions about due diligence in tech investing. Investors like QIA, which led the massive Series D round, now face steep losses. Meanwhile, customers and partners have been left in limbo, unsure if existing projects will be completed or supported.

In the rush to back the next big AI unicorn, it appears no one stopped to ask whether Builder.ai’s product was even real.