Builder.ai, the London-based AI startup once hailed for simplifying app development, is now entering insolvency after a major creditor seized nearly all of its available funds.
Viola Credit, which lent the company US$50 million last year, has taken control of US$37 million from Builder.ai’s accounts, leaving the firm with just US$5 million in cash, CEO Manpreet Ratia revealed.
The remaining funds are tied up in Indian accounts, with restrictions preventing their use to pay staff.
The exact reason behind Viola Credit’s move remains unclear.
Builder.ai’s CEO said in an interview that this seizure effectively drained the company’s liquidity, forcing it into bankruptcy.
Viola Credit has yet to comment publicly.
The firm operates across five regions – the UK, US, India, UAE, and Singapore – and plans to file for bankruptcy according to each jurisdiction’s rules.
Builder.ai’s rapid fall follows a period of significant financial strain and leadership upheaval.
The startup raised US$250 million two years ago in a funding round led by the Qatar Investment Authority, with Microsoft also investing as part of a strategic partnership in 2023
Despite raising over US$450 million overall, the company struggled to meet revenue targets.
In early 2025, it confirmed to Bloomberg that sales forecasts had been revised downwards and auditors were reviewing two years of accounts amid allegations by former employees that sales figures were overstated.
The founder, Sachin Dev Duggal, stepped down as CEO in February, handing over to Manpreet Ratia.
At the same time, Builder.ai reduced its board from nine members to five, with Duggal relinquishing control over most of his seats.
Since Ratia’s appointment in March, Builder.ai’s financial situation worsened.
He disclosed that cash reserves stood at about US$7 million upon his arrival, though subsequent efforts raised US$75 million from existing shareholders to shore up the balance sheet.
However, hefty payments looming – US$85 million owed to Amazon and US$30 million to Microsoft – proved insurmountable.
Ratia described a desperate situation, saying he had to operate with “zero dollars” in UK and US accounts, while creditors also seized funds held in Singapore.
The lack of accessible cash forced the company to lay off most of its employees.
Founded in 2016 as Engineer.ai before rebranding, Builder.ai built a platform aimed at enabling businesses to create apps and websites with minimal coding using AI technology.
However, investigations revealed that much of the work depended heavily on human engineers, contrary to earlier claims of automation.
This discrepancy, along with financial misreporting concerns, undermined investor confidence.
Additionally, Duggal’s leadership faced criticism for high staff turnover and delivery issues, with some former employees blaming his management style.
The former CEO was also implicated in a 2023 Indian money-laundering investigation linked to the collapsed Videocon group, although he denies wrongdoing and is appealing a warrant against him.
Consequently, Duggal's actions have drawn scrutiny.
A former employee shared his thoughts on X,
“They had no moat, even well before loveable/bolt etc.”
Source: X
When asked about how they managed to receive “billion valuation”, he responded,
“Hype-driven investment, false "AI" claims etc. Common theme in the startup space (it's easier to raise millions than build a profitable business)”
Source: X
True enough, while Builder.ai attracted funding from major investors like QIA, Microsoft, SoftBank’s DeepCore, Lakestar, and Hollywood producer Jeffrey Katzenberg’s WndrCo, its weak business model and questionable management decisions ultimately left the company vulnerable to financial collapse.
Builder.ai’s insolvency process will vary by country.
In the UK, courts typically appoint an administrator to manage the company and work directly with creditors, often sidelining current management.
This contrasts with the US system where existing managers remain in charge but require court approval for major decisions.
The company has committed to cooperating with administrators to explore possible options for parts of the business.
Microsoft, QIA, and other investors have not commented on the development.
Meanwhile, the company’s immediate focus is on supporting its remaining employees, customers, and partners during this challenging time.
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