How Sachin Dev Duggal Built a $1.5 Billion Fraud: The Rise and Fall of Builder.ai

When investors like Microsoft, SoftBank, and the Qatar Investment Authority pour over $445 million into a company, they’re betting on a vision. For Builder.ai, that vision was revolutionary: making software development as simple as ordering pizza through AI-powered automation. Sachin Dev Duggal, the founder and former CEO, masterfully sold that dream. By May 2025, it all collapsed. The company filed for bankruptcy, leaving a trail of broken promises, inflated revenues, and a harsh lesson: in the AI boom, perception can trump reality—until it doesn’t.

The Architect of an AI Illusion

Sachin Dev Duggal’s meteoric rise in Silicon Valley wasn’t accidental. His resume reads like a startup founder’s fever dream. At 14, he was building PCs. By 17, he had created one of the world’s first automated forex trading systems for Deutsche Bank. At 21, while still studying at Imperial College London, he launched Nivio, a cloud computing venture that reached a $100 million valuation. When Duggal sold Nivio and later struggled to find a reliable front-end developer for his photo-sharing app Shoto, he had an epiphany: if someone with his engineering background couldn’t find good help, what about non-technical founders? This gap in the market became Builder.ai.

The pitch was elegant. The platform promised to democratize software development by letting anyone—regardless of technical skill—build complex applications through AI orchestration. A digital assistant named Natasha would guide users through the process seamlessly. On paper, it sounded like the next unicorn.

When Hype Meets Market: The Rise of Builder.ai

Launched in 2016 as Engineer.ai before rebranding, Builder.ai operated from London and Los Angeles. In 2018, the startup raised its first significant round: $29.5 million. The lead investors included SoftBank’s wholly-owned subsidiary Deepcore Inc., alongside venture firms Lakestar (early Facebook and Airbnb investor) and Singapore’s Jungle Ventures. By 2022, cumulative funding had reached $195 million.

The turning point came in May 2023. Qatar Investment Authority led a massive $250 million Series funding round, cementing Builder.ai’s status as an AI darling. That same year, Microsoft joined as both a strategic investor and technology partner, integrating Builder.ai’s platform directly into its cloud service ecosystem. The company’s valuation crossed $1.5 billion. With Microsoft’s blessing, Fortune 500 executives took notice. For a brief moment, Sachin Dev Duggal was portrayed as a visionary reshaping software development.

The Illusion Cracks: No AI, Just Artificial

The cracks appeared before the collapse. In 2019, The Wall Street Journal published an investigation that should have been a warning sign: Builder.ai’s vaunted AI was primarily marketing theater. Multiple current and former employees confirmed that sophisticated pricing algorithms and timeline calculations were handled by outdated decision-tree software—a technique from the 1950s. The complex work? Manual labor by developers, mostly based in India.

“Most of the work is done by developers in India, not AI,” said one insider. “The company lacked natural language processing technology. These simple decision trees should never have been labeled AI.”

The gap between narrative and reality widened over time. Reddit posts and employee testimonies painted a darker picture: incomplete deliverables, unreliable code modules, an IDE that wouldn’t function, and development experiences described as “extremely poor.” One user documented how they encountered incomprehensible platform behavior—missing components, unusable code snippets, even modules that couldn’t be modified.

The business model, stripped of its AI veneer, revealed itself: hire large teams of low-cost offshore developers and brand their manual work as artificial intelligence. It was AI washing—using the hype around machine learning and automation to justify valuations that had no technological foundation.

Sachin Dev Duggal’s Reckoning: When Growth Meets Legal Trouble

Internally, tensions accelerated the company’s unraveling. Former employees described a culture of wage suppression and broken promises. “The salary is rubbish,” one former worker stated bluntly. “This isn’t an AI-focused company; it’s a marketing machine.”

By early 2025, Sachin Dev Duggal faced mounting legal challenges. According to the Financial Times, he was implicated in a criminal money-laundering investigation in India. Though Builder.ai’s general counsel claimed he was merely a witness, the scandal damaged his credibility. In February 2025, Duggal stepped down as CEO—ostensibly to address these issues. He remained on the board with the title “wizard,” but the damage was done.

His replacement, Manpreet Ratia, was brought in from Amazon and Flipkart to “clean up the mess.” Ratia represented a last attempt at credibility. But he inherited a company built on false promises.

The Financial House of Cards Collapses

The structural problems were unsustainable. Builder.ai operated with a bloated workforce (770 employees globally), aggressive expansion plans into Southeast Asia and the Middle East, and an ever-increasing burn rate. Meanwhile, revenue projections were inflated by as much as 300% to maintain investor confidence and secure fresh capital.

By May 2025, the situation reached a breaking point. Viola Credit, one of the senior lenders, reviewed Builder.ai’s financial covenants and discovered the truth: revenues had been materially misrepresented. The company had violated lending agreements by providing fraudulent financial projections.

Viola Credit acted decisively. It seized $37 million from Builder.ai’s accounts, triggering immediate default. Just two months into his tenure, Manpreet Ratia found himself with only $5 million remaining—and that cash was frozen by government regulations on fund outflows. The company couldn’t even pay its employees.

On May 20, 2025, Builder.ai filed for bankruptcy. A month earlier, in a desperate restructuring attempt, the company had already laid off 220 of its 770 employees. The final insult came when financial filings revealed the scale of debt: $85 million owed to Amazon and $30 million to Microsoft. The strategic partner that had helped legitimize Builder.ai’s vision was among the biggest losers.

The Pattern: Why Intelligent Investors Fall for Unintelligent Companies

How did sophisticated venture capitals and tech giants miss the obvious? The answer lies in the investment climate of 2021-2023. ChatGPT’s launch in November 2022 triggered a AI gold rush. Investors feared missing the next transformative technology, and due diligence often took a backseat to speed. Sachin Dev Duggal’s fabricated credentials—the teenage prodigy narrative, the prior exits, the high-profile advisors—fit the archetype perfectly.

Builder.ai’s playbook was refined fraud: start with a compelling founder story, marry it to trending technology language (AI, automation, democratization), secure validation from recognizable logos, and use each funding round to amplify scale metrics that impressed but obscured underlying dysfunction.

The comparison to Theranos is inevitable. Like Elizabeth Holmes’s blood-testing startup, Builder.ai confused visibility with viability and scale with sustainability. Both companies used narrative to substitute for substance. As one analyst noted: “When there’s a 1mm gap between technological promise and actual capability, the capital market will tear open a 1km abyss in the next second.”

The Broader Lesson: AI Washing and Market Reality

Builder.ai’s implosion marks the largest AI startup bankruptcy since ChatGPT’s emergence. Yet the low-code/no-code market itself remains healthy. Gartner forecasts that by 2028, 60% of new enterprise applications will use such platforms, with the global market reaching $26 billion by the end of 2025. The sector’s potential is real—the problem was Builder.ai’s execution.

For customers, the collapse created immediate hardship. Startups and small-to-medium enterprises that relied on Builder.ai’s platform had to scramble to migrate applications or rebuild from scratch. It highlighted the dangers of depending on emerging players for mission-critical infrastructure.

Conclusion: When Hype Becomes Hubris

Sachin Dev Duggal’s story is not primarily about failed technology—it’s about the consequences of pretending technology ever existed. Builder.ai looked like a success story: celebrity investors, major partnerships, glossy awards, billion-dollar valuations. But beneath the polished exterior was a company that substituted marketing for engineering, scale for substance, and narrative for innovation.

The irony is sharp: a company that promised to democratize software development ultimately betrayed everyone who trusted it—from sophisticated institutional investors to struggling startup founders. The lesson is equally sharp: in a market intoxicated by AI hype, even Microsoft can be fooled. But as Viola Credit learned in May 2025, financial reality has a way of settling accounts that no amount of narrative can avoid.