Builder.ai and the Unravelling of a Startup Dream

In the long litany of post-Covid tech eulogies, Builder.ai now has pride of place—a unicorn no longer, a billion-dollar dream disbanded in bankruptcy court filings and exposés. At its peak, it was a no-code revolution, a darling of Microsoft, a flagbearer of Indian talent in London. Now, it is mostly a cautionary tale. This particular tale also reveals a great Indian illusion, wrought not by fraud alone, but by the seductive convergence of hope, hype, and habit.

The conceit at the heart of Builder.ai was seductively simple: anyone, anywhere, could build software without writing a single line of code. You would tell “Natasha”—an AI-powered virtual product manager—what you wanted, and she would conjure your app, tailoring it like a couturier with digital scissors. “Zero code, zero headaches,” went the pitch.

Except, the scissors were wielded by 700 human engineers based in India—who, according to former insiders and now widely reported exposés, were asked to behave like AI. It was the mechanical Turk of the 2020s, dressed in neural net robes. They worked from white-labelled vendor firms in Indian cities, some as junior developers, some as testers, and most entirely unaware that the product they were helping deliver was marketed globally as AI-generated.

This wasn’t a startup cutting corners. It was a philosophical sleight of hand. Builder.ai did not invent the idea that humans could temporarily stand in for AI; it merely operationalised it at scale. In doing so, it exposed a broader industry pattern—where AI is not so much a capability as a costume. Everyone is building with AI now, except when they are not. Investors clap for “AI-powered” startups the way colonial anthropologists once applauded ventriloquists: not for the substance, but the spectacle of the act.

Sachin Dev Duggal, Builder.ai’s founder, had all the markings of a modern technocratic messiah. A serial entrepreneur, TEDx speaker, and former chief evangelist at Deutsche Bank, he looked the part: articulate, international, fluent in the dialect of disruption. His LinkedIn biography reads like a business-school case study turned screenplay: started coding at age 12, built an early social commerce platform, secured hundreds of millions in funding.

What is rarely noted is the less photogenic pattern across some of his past ventures—ambitious projects that promised to change the world but quietly faded before delivering. For instance, Shoto, a photo-sharing application he founded, struggled to gain a substantial user base and ceased operations after a period of limited traction.

Duggal is not alone in this. The Indian startup ecosystem is replete with such figures: visionary, media-trained founders whose success lies less in execution than in perpetual narrative construction. Their real product is not technology—it is belief. And for years, belief scaled beautifully.

This gospel of scale, absorbed from Silicon Valley but rehearsed in India, has created an ecosystem where storytelling often outpaces truth-telling. Founders are taught to “fake it till you make it” and in a country where aspiration outpaces infrastructure, this isn’t always read as deceit—it’s read as hustle. Until, of course, the hustle unravels.

Builder.ai’s real undoing, however, came not from the AI theatrics but from a more classic manoeuvre: financial round-tripping. In partnership with VerSe Innovation—the parent company of Dailyhunt—Builder.ai allegedly exchanged matching invoices between 2021 and 2024 to inflate revenue on both ends.

This is not novel. Round-tripping is as old as modern accounting, and in India, it has long been a preferred tactic of shell companies and political donations. What made the Builder-VerSe case shocking was how thinly disguised it was. According to Bloomberg’s May 2025 report, the companies billed each other for near-identical amounts with no tangible exchange of services. This ghostly trade inflated their topline just in time for key investor rounds.

The deeper concern lies not merely in the alleged financial misrepresentations but in how they seemingly went unchecked. With VerSe Innovation backed by giants like Google, and Builder.ai supported by Microsoft and Qatar’s sovereign wealth fund, the situation raises questions about the robustness of due diligence practices among even the most prominent investors.

There is something telling about the names on Builder.ai’s cap table. Microsoft not only invested in the company in 2023, it also featured Builder.ai in a strategic partnership push for Azure cloud services. The Qatar Investment Authority, hardly known for speculative bets, led a $250 million Series D round, taking the company’s valuation past $1.5 billion.

This is the real alchemy of modern tech startups: third-party validation as value. Once Microsoft signs on, who checks the code? Once Qatar wires the money, who questions the model?

It would be easy to cast these investors as dupes but that would miss the point. Most of them are not naive. They are simply betting not on truth but on timing. Get in early, inflate the hype, ride the valuation, and exit before gravity reasserts itself. That this exit is often made at the expense of Indian employees and middle-stage customers is not a bug—it’s the business model.

In that sense, Builder.ai is not an aberration. It is a parable. It reminds us that in the unicorn economy, complicity often looks like confidence, and oversight is more about optics than outcomes.

By May 2025, the dream had burned out. With $37 million seized by lender Viola Credit, bankruptcy filings initiated, and the media cycle turning feral, Builder.ai’s carefully staged façade fell apart.

In India, where hundreds of engineers had silently sustained the illusion, the fallout was immediate. Projects stopped mid-delivery. Contracts were frozen. Internal teams that once built under pseudonymous AI labels now found themselves without salary, severance, or clarity. In the power hierarchy of global tech, the worker remains replaceable; only the founder gets a Netflix docuseries.

We are still living in the afterglow of India’s unicorn surge, where startups were not just companies but declarations of intent. And yet, for every successful Zoho or Zerodha, there are a dozen Builder.ais—overfunded, overhyped, and under-accountable. Byju’s, once the world’s most valuable edtech firm, raised billions in venture funding, secured global celebrity endorsements, bought American education companies—and then fell into crisis. Allegations of financial misreporting, FEMA violations, and toxic work culture now surround the company. Its valuation has plummeted from $22 billion to under $3 billion. The founder who once promised to teach India how to learn is now busy learning how to defend a company from collapse.

Paytm, India’s fintech poster child, went public in 2021 in a blockbuster IPO. Investors rushed in, lured by the company’s brand recognition and its role in the digital payments revolution. But cracks began to show post-listing. Regulatory non-compliance with the RBI, internal governance lapses, and continued losses drove its stock down by over 75 percent. SoftBank pulled back. Customers grew wary. Trust, once a growth multiplier, became a liability.

Zilingo, Trell, TinyOwl—these are names once floated with pride on founder slides, but now quietly archived in cautionary blog posts. Zilingo, a fashion-tech company with a valuation nearing $1 billion, collapsed after revenue manipulation came to light. Trell, a lifestyle video platform, raised $45 million before imploding over financial irregularities. TinyOwl, a food delivery venture, vanished after mass layoffs triggered employee protests. Each story is different, but the script feels eerily familiar: overfunded, under-governed, media-lavished and structurally fragile.

And yet, none of these companies set out to fail. That is what makes the pattern so revealing. It is not malice that drives most startup collapses. It is mimicry. Everyone copies the last great success, forgetting that the last great success often copied something else. Builder.ai mimicked the grammar of AI without possessing the machinery. Byju’s mimicked edtech unicorns without safeguarding pedagogy. Paytm mimicked platform scale without anchoring compliance.

In India, the mimics are often more talented than the originals. Indian engineers power the backend of global technology. Indian founders, groomed on American venture logic, speak with startling fluency about CAC (Customer Acquisition Cost), TAM (Total Addressable Market), and GTM (Go-To-Market strategy). Indian consumers, digitally literate and aspirational, are ready for solutions. But the structure within which these energies are deployed is flawed. Builder.ai was not built to last. It was built to raise.

The damage of these collapses is not just reputational. It is material. Builder.ai rode the “no-code” and “low-code” wave, part of a broader movement that promised to democratise software development. Yet in execution, this dream revealed an old asymmetry: intellectual value was accrued in London and San Francisco, while the brute labour—debugging, testing, fixing—was outsourced to invisible engineers in Bengaluru. The AI didn’t do the work. Indians did.

This raises an uncomfortable question: what do we really mean when we say “AI built this”? Do we mean that the code was auto-generated? Or do we mean that the people building it have been anonymised into the backend of a marketing myth?

For a nation like India, with its deep engineering talent pool and fragile regulatory scaffolding, this story is both opportunity and warning. On the one hand, Indian coders are the unsung infrastructure of the global tech boom. On the other, they are increasingly cast not as knowledge workers but as replaceable nodes in someone else’s vision.

There will be more Builder.ais. The incentives remain. The press cycles will shift. New founders will emerge, offering new acronyms in place of old lies. But something has changed. If the last five years were about scale, the next five may be about scrutiny. If the first wave was about believing the machine, the next may be about looking behind the curtain.

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