London-based technology start-up Builder.ai, backed by investors including Microsoft, has entered insolvency proceedings amid significant financial challenges. This decision follows a recent restatement of its revenue, and the acknowledgment of issues related to past leadership. The company, known for its claim that its AI solutions simplify app and website creation, broke the news to employees during a company-wide call, outlining its plans to file for bankruptcy.
The principal unit within the company, Engineer.ai Corporation, will commence insolvency proceedings and appoint an administrator to oversee its corporate affairs, as confirmed to the Financial Times. This development represents a major setback for significant investors such as Microsoft and Qatar’s sovereign wealth fund, who together invested over $500m into what was once a promising tech venture.
Leadership changes and financial troubles at Builder.ai
Sachin Dev Duggal, the founder of Builder.ai, had previously stepped down from his role as CEO but maintained his position on the board. The new CEO, Manpreet Ratia, informed employees that senior lenders have placed the company in default and seized its cash reserves. Despite securing a $50m debt facility in October 2024, Ratia noted that available funds had decreased to roughly $7m by the time he assumed leadership in March 2025.
Builder.ai sought to remedy its financial instability by raising an additional $75m from existing shareholders. Nevertheless, it faces substantial debts, including $85m owed to Amazon and $30m to Redmond. Ratia explained operating with empty US and UK bank accounts and described difficulties in processing payroll due to assets being seized.
Duggal has been under scrutiny following reports that linked him to a criminal investigation in India; he denies any wrongdoing. An internal review at Builder.ai led to a preliminary report on previous financial practices within the company.
Earlier this year, Builder.ai revised its 2023 revenue downward to $140m. The company also announced a 25% reduction to its forecast for the second half of 2024. Accounting methods employed by the company were subject to scrutiny due in part to connections between Duggal and an auditor with established ties.
As it proceeds through insolvency, administrators will examine potential strategies for different segments of Builder.ai’s operations while managing immediate business affairs. Meanwhile, Duggal continues to face allegations related to his past activities, although he maintains his innocence concerning any legal accusations against him.
Builder.ai was established more than 10 years ago and has raked in substantial capital over this period. Despite these efforts, recent financial turmoil has overshadowed its initial success story in the tech industry. It surpassed the $1bn valuation following its last funding round led by Qatar Investment Authority in 2023. However, the British tech unicorn’s future remains uncertain as it navigates this challenging period.
The company has confirmed it is considering options for various parts of its operations during the insolvency process. These developments mark a critical phase for Builder.ai as it seeks stability amidst ongoing financial and operational challenges.
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