Microsoft-backed UK tech unicorn Builder.ai collapses into insolvency

https://www.ft.com/content/9fdb4e2b-93ea-436d-92e5-fa76ee786caa

by louthy • 1 year ago

176 134 1 year ago

ft.com

louthy• 1 year ago

https://archive.ph/T5ean

zpeti• 1 year ago

Absolutely baffles me how you can blow $500m on a website builder without anyone noticing.

What the hell happened? Unless it was an actual defrauding of investors, but how were the investors so stupid?

mattlondon2• 1 year ago

Perhaps they blew it all on "research" and GPU costs?

The current Gemini canvas implementation is pretty wild and can create you an app or website very very easily. Not as easy as ordering a pizza sure, but still even with just a few iterations you have something truly decent. Occasionally you luck out and the "one shot" is precisely what you want, but that typically requires an extensive prompt so you're beyond pizza range then.

Perhaps they were just too ahead of their time in that regard... But then if they'd waited then Google and OpenAi and Anthropic would have just eaten their lunch anyway (provided Claude was not too busy blackmailing you anyway!)

thw09j9m• 1 year ago

nah

https://www.theverge.com/2019/8/14/20805676/engineer-ai-arti...

(same company, before rebranding to builder.ai)

lm284692• 1 year ago

Some people have so much money they don't mind investing 10-100m here and there in the hope of making a 10x return. Greed and hype explains a lot of the juicero type of investments.

It says a lot when public services are deteriorating pretty much everywhere while investors blow hundred millions on fruit pressing machines and LLM wrappers

bojan• 1 year ago

The public services are deteriorating because that's what the people are voting for.

_fizz_buzz_• 1 year ago

How can I talk to those people? I have a business that is profitable, but small. And I find it difficult to talk to investors.

bandoti• 1 year ago

I agree I mean what about all the teachers and the long term impact they have on society? A “little hundred mil” could go a long way.

But, that aside, since I’m just getting into the Lean Startup:

In chapter 12—startups typically need Scarce but Secure Resources:

“too much budget is as harmful as too little—as countless dot-com failures can attest—…”

I suppose this falls under case-and-point. They had too much money and blurring the lines between real customers and early adopters. This whole thing could have probably been figured out for a couple mil I’d imagine (though I’m no expert).

chairmansteve2• 1 year ago

Also, some may hope to sell to a greater fool. Which works a lot of the time.

benbojangles3• 1 year ago

If you look at some youtube videos of Sachin Duggal over the last year he is draped in lvmh labels, the finest tailoring, super expensive turkey teeth, and doing news interviews from expensive Dubai suites. My guess is he will make those things his mainstay from now on. I notice a common theme in dodgy ceo's; they all do the carrying-an-invisible-ball thing with their hands when they are presenting.

rsynnott2• 1 year ago

I mean, have you not been paying attention to the current AI bubble? Hundreds of billions are being blown on all manner of implausible nonsense.

empiko• 1 year ago

We will see more and more AI startups running out of money soon. I know of a handful of similar 100m+ raised companies that have no product to speak of and are just cruising towards their end.

6stringmerc3• 1 year ago

When the dominoes start to fall, perhaps it’d be helpful to post a public list of existing / existed AI firms with brief descriptions, timespan of operation, capital / investments publicly known, and give a reference point for historical sake. The startup sector being quite diverse, one specifically for AI could be interesting…as in context for all the “problems” and “benefits” AI was going to solve but failed and burned money in the process.

airstrike• 1 year ago

Might as well start building that list here

InsideOutSanta• 1 year ago

Somebody needs to bring back Fucked Company for AI companies.

imiric8• 1 year ago

Hopefully it's a sign of the bubble starting to pop. This is the same situation we had in the late 90s with the dot-com bubble. Many companies built on hype with lackluster products. So much so that it became a meme with zombo.com. We need an AI-bubble equivalent parody product.

voidfunc• 1 year ago

Anything is possible at ZomboCom, You can do anything at ZomboCom.

Seems to be covered already!

stephenr5• 1 year ago

Don't be silly. Just because the Crypto/Blockchain promises of grandeur turned out to be mostly nothing, and the "fuck regulation, we are all the <hotel, taxi driver, you name it>" "gig economy" companies are losing customers as they show their true colours, and the AI bubble starts to burst, that doesn't mean that over-hyped niche "technologies" can't rake in millions of some poor VC investors money.

It just requires lateral thought.

Pay the completely untrained gig-workers peanuts to review AI written code to create a universal blockchain "bank without borders". I mean what could possibly go wrong?

einsteinx2• 1 year ago

I feel like we’ve had two already with the Rabbit R1 and Humane AI Pin. So many company got funded with obscene amounts of money though, so I think we still have dozens more coming soon. Though I imagine a lot of them will be quieter failures having not even gotten to a product launch yet.

datavirtue4• 1 year ago

Why does everyone always want the bubble to pop?

oldpersonintx2• 1 year ago

isn't this normal for any new emerging market?

mahirsaid• 1 year ago

Depends! but Their selling the coming to investors on hopes of reinviting something that is already there. The data they're using isn't owned by them. All of these " unicorn " wanna be's are wasting investors money. This will be the norm for the upcoming years. Regulations are driving these AI companies to divert their efforts to something less substantial. First regulations has to be aligned with the goals of tech and see where this direction will head.

nyarlathotep_• 1 year ago

This is my "hot take" as well.

My genuine question--outside of programming-related use-cases (which are remarkable), what has come out of the generative AI "boom" that's a profitable product, or has a viable path to profitability?

What "business transformation" has happened in the private sector as a result of "agents" or whatever? What companies look promising (don't say another VSC fork)?

hiq• 1 year ago

A lot more customer support seems to be handled by chat bots these days. For support that has migrated from humans to chatbots, I assume it's a poorer but cheaper implementation. For support that has migrated from older chatbots (that seemed to base their answers on regexes or some weird branching logic), maybe it's an improvement?

I'm not into this space, but I also assume that translation work is moving from a writing to an editing job, since an LLM can do that pretty well. I just had an LLM correcting my German mistakes for an email I had to send today.

I'm also not sure that profitability is relevant just yet, as inference costs keep going down. Programming-related use-cases do encompass a lot of why GenAI is useful, simply because they make anyone able to write their mothertongue a programmer. It's fine if LLM-based products bootstrap with high-margin industries like tech, and move into thinner margin ones as costs go down. Of course I'm also not saying the current valuations and hype are justified (I don't know).

sameermanek• 1 year ago

I think veo and other generative video startups will find their place in advertisement space. I recently saw a pharma ad and its so convincing. Apparently it was generated with just $500 credit, and i know that this price will have to go up multi folds for it to be profitable but given that these ads cost 100s of thousands to make in 1 language, I dont think we have anything against making ads with AI if they save us so much money and can generate same ad in multiple languages.

dannersy• 1 year ago

None. No one is making money off of AI except for Nvidia.

Even if there are use cases, all of them are operating at extreme losses. As someone else said, maybe throw away video content? But I suspect that the providers are burning piles of cash to maintain users which is true for all AI driven products.

ludicrousdispla• 1 year ago

so many AI chatbots could be easily replaced with links to navigable documentation

skydhash• 1 year ago

Or just a proper sitemap.

nssnsjsjsjs2• 1 year ago

Problem with AI startup Ps is most have to lose. Open AI or cursor making a great product means this one becomes irrelevant.

ljm• 1 year ago

I interviewed with them a fair while back and noped out as soon as they told me their ‘tech leads’ were typically assigned to handling 15 or 16 projects at a time for around £70-80k a year. Interviewed an ex senior engineer of theirs who was still junior/mid really.

By all accounts it looked like another web dev sweatshop and it just used AI as bait.

Decided to just step back from it all. Most AI startups are all talk and no action. Long hours and weekends with nothing to show for it.

binary132• 1 year ago

I think a lot of startups are not really built with winning in mind but are more like a VC grift or even just a way for “serial entrepreneurs” to keep themselves busy and paid.

spamizbad2• 1 year ago

Even a financially responsible (and I’m not suggesting Builder.ai is one of these) company in the AI space is going to be significantly more capital intensive than your typical SaaS startup, and I suspect are fundamentally more challenging to operate.

mtkd• 1 year ago

SaaS companies tended to need material engineering resource due to the software stacks and squad-style team structures in place -- also leaned heavily on costly metered infra

I'm not seeing anything like the same level of heads or stack complexity in this wave (Vercel, Firebase etc.), and the vendors involved get cheaper every day ... along with increasing ability to run models locally with no metered costs at all

aerhardt• 1 year ago

How?

Now you need to deal with all the traditional infra, plus a bunch of specific infra dealing with LLM apps, even if you’re just a wrapper using vendor APIs.

How are things in any way simplified? I only see more layers of complexity.

spamizbad2• 1 year ago

If you're in the AI space you need roughly the same infrastructure as any other SaaS PLUS your LLM costs. Take a look at AWS Bedrock costs [1] and you'll soon realize your costs can escalate rapidly unlike traditional SaaS infra which is easier (er, less difficult) to predict costs.

[1] https://aws.amazon.com/bedrock/pricing/

krona• 1 year ago

From earlier this year:

A partner at accounting firm PKF Littlejohn signed off the UK accounts of the artificial intelligence start-up, despite having previously served as a director of another company also set up by Builder.ai’s founder, Sachin Dev Duggal, according to a review of hundreds of filings analysed by the Financial Times.

https://archive.ph/qdUFD

ixaxaar• 1 year ago

I wonder how many of these hype-chasing AI founders are going to take the path of self-enrichment while capitulating their startups when they get exhausted of searching for a moat.

kasey_junk• 1 year ago

All of them

7952• 1 year ago

And there are already so many companies with an existing moat that could go into this space with their existing user base.

diggan• 1 year ago

of these hype-chasing AI founders [...]

I mean, if you qualify that question like that, then probably closer to 100%.

What would be more interesting to know, is how many AI founders starts out as "not hype-chasing", but end up self-enriching/capitulate their startups regardless, basically turning into it rather than starting out like that.

moron4hire• 1 year ago

How do I get into this game? Take a bunch of VC money, pay myself a hefty salary, don't give a damn about my employees if the whole thing goes bust. Must be nice, not having principles.

blitzar2• 1 year ago

I wonder how many of these hype-chasing AI founders are NOT going to take the path of self-enrichment while capitulating their startups when they get exhausted of pretending to build something.

epolanski3• 1 year ago

Not sure why would the AI part make the difference with other founders.

fidotron• 1 year ago

https://www.ey.com/en_gl/weoy/class-of-2024/united-kingdom

maccard2• 1 year ago

I don’t think this is necessarily as sinister as you say - another way to right that paragraph is “successful accountant who has a history with AI companies does accounting”

rvz• 1 year ago

The entire company and its $500M has been "deleted" [0] over fraud and cooking their books.

A great candidate for the Theranos of AI, even with Microsoft involved as an investor.

We'll see a new wave of fraud(stars) being exposed out of this AI hype.

[0] https://builder.ai

Tarsul• 1 year ago

here's the website from the waybackmachine: https://web.archive.org/web/20250328114320/https://www.build...

look at all the awards and brands!

6stringmerc3• 1 year ago

“Assembles your idea like a LEGO set” is pretty blatant trademark infringement too. Clearly it did not work as a LEGO set because those…actually work. Yet another example of startups getting funding whilst blatantly flouting IP ethics, color me not surprised at all.

BandButcher• 1 year ago

Maybe I'm just a bad dev but I'm baffled how they charge $46k for "29 features" and $56k for "43 features"... Straight up guestimations and magic numbers

but then again they also highlight how you don't have to know anything about tech to use them, so I'm sure setting "fixed pricing" for a fixed number of "features" is a great way to snake oil salesman potential customers

fakedang• 1 year ago

Best parts are the Gartner Magic Quadrant and G2 awards.

Perhaps we should treat them as the Forbes 30 under 30 of SaaS.

datavirtue4• 1 year ago

Hmmm...criminal CEO plus no product that people need. Who would have guessed this outcome?

6stringmerc3• 1 year ago

Until clawbacks as strict banishment enforcement from the ability to serve in corporate governance roles, it’s rather depressing to catch up after the fact and realize there’s nothing particularly stopping these bad actors individuals from profiting and potentially moving on to another shaky, at best, enterprise courting suckers…I mean, investors.

tuyguntn• 1 year ago

Why is this a big news, didn't we already learn that most startups/companies fail and investors are just betting to find their next unicorn?

contrary to builder.ai, we now have success stories in this area: lovable, cursor, replit agents and so on

jsheard2• 1 year ago

contrary to builder.ai, we now have success stories in this area: lovable, cursor, replit agents and so on

Builder.ai was also a "success" until someone double checked their books and discovered they were inflating their revenue by about 300%. Much to consider.

chairmansteve2• 1 year ago

It's maybe a bit of a Theranos situation. Not your normal sincere effort that fails.

bigtex• 1 year ago

Are any of those companies profitable?

conradfr• 1 year ago

The company’s founder Sachin Dev Duggal (...) retained his board position and title of “chief wizard”.

Flash of the Silicon Valley show.

gchamonlive• 1 year ago

Look at all the great unsustainable AI applications we're never going to be able to use.

I think the big and juicy AI applications are just so that GPUs can go brrrr[1]. Just gimmicks.

Real and useful applications will come from SLM that can be run on SoC like phones or Raspberry PIs and LLMs optimized to run on consumer grade hardware like the 3060s, not with those models that require multimillion dollar setups to be able to run.

[1] https://news.ycombinator.com/item?id=40337936

nikcub• 1 year ago

Following the public reporting timeline of builder.ai lays out a fascinating story akin to Theranos or Wework. I'm sure we'll get an exhaustive account of exactly what happen in due course, and there will likely be other such cases that come out of the most recent AI investing boom.

Aug 2019 - WSJ report that for builder.ai the "AI" means "Actually people in India"

https://www.wsj.com/articles/ai-startup-boom-raises-question...

FT pick up the trail over a year ago with a series of reports:

Mar 2024 - Men behind builder.ai named in criminal probe

https://www.ft.com/content/7ff3c5fc-e390-4ca8-9c7d-11fd56ab7...

Mar 2024 - The wild ride of a Microsoft-backed tech unicorn

This is a full detailed profile of the CEO and the company detailing their wild spending and fundraising details:

https://www.ft.com/content/11afc46c-b435-489d-a9f1-134ad0c00...

It all falls apart after that report:

May 2024 - CEO steps down

https://www.ft.com/content/f8882c90-ef69-4a62-aecf-9d3725aca...

May 2024 - builder.ai finds auditor had links to previous CEO:

https://www.ft.com/content/26c98590-e8f9-4cd9-83d6-db0d25ad2...

Apr 2025 - builder.ai restates revenues and hires outside auditors to investigate inflated sales

https://www.bloomberg.com/news/articles/2025-03-31/microsoft...

and this week they folded. The website was up 48 hours ago last I checked, but has now been taken down.

aaomidi• 1 year ago

I’m not sure what happened there but I’ve both experienced and seen so many startups where their initial leadership was great, then VC gets involved and completely destroys the long term trajectory of the company in exchange for short term growth.

I genuinely think twitter and LinkedIn has ruined the brains of founders who follow fads after losing the goals and visions they had when they first started.

SpicyLemonZest• 1 year ago

There've always been companies that crash and burn chasing unrealistic dreams of future profits. I think what Twitter and LinkedIn have created is the false perception that these kinds of things are representative of the industry. Another recent unicorn startup in the UK is Tripledot Studios, which has much more revenue and has made bigger investment deals than Builder.ai at its peak. But they're in mobile gaming and not AI trendy wave of the future stuff, so you don't hear so much about them.

xyst• 1 year ago

the first domino has fallen, the rest of the industry to follow?

Big tech then swoops in and buys up any _worthwhile_ startup for cheap and consolidation of power continues for tech.

kwillets• 1 year ago

The UK has cemented its place in tech as the land without Sarbanes-Oxley.

benbojangles3• 1 year ago

It's true.

benbojangles3• 1 year ago

Read about so many companies here in the UK that setup, claim huge success, max out loans and debts, then either fold/disappear or float on fraudulently inflated share prices, owner sells all their shares, then the company share price crashes. Happens all the time now, sadly, since the UK's welcome doors opened wide. This system runs deep here, laundering with barber shops, american candy stores, made up corporations, crypto fraud, carousel fraud, corporate fraud. It makes me sad, because I know I will never get a chance to build a business successfully and honestly here after all this damage is done.

datavirtue4• 1 year ago

Now the M&M store makes sense.

rorylawless• 1 year ago

The M&M store is the only legit business in London.

tacker2000• 1 year ago

Well that investor list reads like a who’s who of dumb money…

sgt• 1 year ago

That TLD is no guarantee for success.

nssnsjsjsjs2• 1 year ago

Do we need law to keep wages in escrow, including notice periods.

bartread• 1 year ago

The company’s founder Sachin Dev Duggal stepped down as chief executive earlier this year but retained his board position and title of “chief wizard”.

If only there were some signal in the behaviour of a person who calls themselves “chief wizard” that might suggest they were prone to making poor quality business decisions.

For real: this is not a job title that would be adopted by a “serious person” - a real expert, with real insight, and a real plan to deliver. Why have investors given his company tens of millions of dollars?

I get that investors are looking for that 10x return and are ready for some failures along the way but that mindset seems to be used as cover for a lot of dumb money. Whereas the reality is that VCs and corporate backers would enjoy much better returns if they simply avoided the most obvious grifters.

People who can’t answer specific questions about delivery with concrete answers - Elizabeth Holmes, the WeWork clown, this guy, and on and on - should be avoided. And especially if they have dumb job titles.

greatgib• 1 year ago

   Builder.ai was then able to raise $75mn from some of its existing shareholders to try to fix its balance sheet, according to two people familiar with its finances.

I'm just trying to imagine the kind of funds or investor for who 75m dollars is just a comma in a report and that can give them so easily despite the obvious high probability to lose it.

justinbaker84• 1 year ago

It is dissapointing to see how frequently VCs invest hundreds of millions of dollars into fraudulent companies. This is very different from investing in legit companies that don't work.

It often seems like you are more likely to raise VC by being a fraud than by being a responsible person who wants to do something positive in this world.

blitzar2• 1 year ago

It often seems like you are more likely to raise VC by being a fraud than by being a responsible person who wants to do something positive in this world.

You can't 10x - 100x and get an exit on a responsible person who wants to do something positive in this world.

chuckadams• 1 year ago

The ironic thing is, if Builder.ai were a younger company, they might have been a success through the unorthodox expedient of actually using AI for real. Maybe they were forward-looking -- we had "machine learning" then that was making some inroads -- but when you use foresight to make more plausible what is still a fraud today, it's ... well, still a fraud. Someone will build Theranos's mythical diagnostic robot someday too, doesn't mean it isn't fiction now.

Microsoft-backed UK tech unicorn Builder.ai collapses into insolvency

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