BuilderAI

Builder.ai, a UK-based artificial intelligence startup backed by major players like Microsoft and the Qatar Investment Authority (QIA), is heading toward bankruptcy after a critical financial blow. The company’s CEO, Manpreet Ratia, revealed that a key creditor, Viola Credit, had seized $37 million from its accounts, leaving Builder.ai with only $5 million in liquidity. This sudden cash shortfall forced the startup to halt operations across its five key markets — the UK, US, India, UAE, and Singapore — and initiate bankruptcy filings according to each region’s legal framework.

The company, founded in 2016, developed a no-code platform that allowed businesses to rapidly build custom smartphone applications, gaining significant investor interest at the peak of AI enthusiasm. In 2022, it raised $250 million in a funding round led by QIA and received an equity investment from Microsoft in 2023 as part of a strategic partnership. However, despite this strong backing, Builder.ai began to face scrutiny earlier this year after former employees raised concerns over inflated sales figures. This led the company to revise its sales forecasts and hire auditors to review its financials.

Builder.ai’s situation deteriorated further when the $5 million remaining in its accounts was found to be held in India, subject to regulatory restrictions that prevented the funds from being used to pay overseas employees. The financial instability resulted in widespread layoffs, with only a skeleton team remaining. The firm noted that it would appoint an administrator to oversee its affairs as part of the insolvency process.

The case illustrates the volatility and risks associated with investing in fast-growing AI startups, even those with prominent backing. It also highlights how financial mismanagement and dependence on key lenders can destabilize promising ventures.

Adding to its internal turbulence, founder Sachin Dev Duggal stepped down as CEO in February, with Manpreet Ratia taking over leadership. Around the same time, the board was reduced from nine to five seats, and Duggal was asked to relinquish most of his control.

Other high-profile investors in Builder.ai included the World Bank’s International Finance Corporation (IFC), WndrCo (led by Hollywood veteran Jeffrey Katzenberg), Lakestar, and SoftBank’s DeepCore incubator. Neither Microsoft nor QIA has commented publicly on the bankruptcy developments.

While insolvency laws vary across countries, the process in the UK involves a court-appointed administrator taking control, in contrast to the U.S., where management often remains in place under judicial oversight. Regardless of jurisdiction, the road ahead for Builder.ai will now be shaped by creditor negotiations and potential restructuring efforts.