AI startup valued at $1,500,000,000 collapses after it's found to actually be 700 engineers pretending to be bots
A startup company that said it was powered solely by AI has collapsed after it was rumbled for having staff 'pretending to be bots'.
Tech pros have been left gobsmacked after learning $1.5 billion artificial intelligence business Builder.ai has been operating behind an AI facade since its inception in 2016.
The British company emerged on the scene as a pioneering platform, allowing businesses to create applications with minimal coding through what they thought was AI.
But now, it has been revealed the code actually came from around 700 human developers and programmers from India who were tasked with acting like an AI bot.
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Builder.ai had made partnerships with Microsoft and had also secured a $250m investment from the Qatar Investment Authority, reports International Business Times.
In total, it accumulated more than $450 million in funding, from leading investors like Microsoft and the World Bank's IFC amongst others.
Yet Builder.ai filed for bankruptcy protection and entered insolvency proceedings as per its statement on LinkedIn last month.
According to Bloomberg, the company plummeted after a major lender, Viola Credit, which had given the company a $50 million loan in 2023, withdrew $37 million from its accounts and left Builder.ai with just $5 million in restricted funds.
The move essentially paralyzed the company from fulfilling payroll duties or maintaining its core operations.
Auditors were also reportedly drafted in less than two months ago to inspect the company's financial history over the past two years after employees raised the alarm over sales performances being inflated during investor briefings.
Earlier this year, CEO Manpreet Ratia took the reigns from founder Sachin Dev Duggal and said most of the company's employees had been laid off.
Then, Linas Beliūnas, Director of the financial company Zero Hash, uncovered that Builder.AI was vastly lacking its main pull - any AI - having found a group of Indian developers were instead were pretending to be bots writing the code.
"Wild: $1.5 billion AI unicorn just collapsed as it turns out their 'AI backend' was just Indian developers pretending to write code," he wrote on LinkedIn.
Beliūnas also claimed Duggal 'reported fake revenue to investors'.
"Somehow, the company was able to keep this scam going for eight years," he alleged.
"The Qatar Investment Authority (QIA) is one of the biggest losers in this saga. They led a $250 million funding round two years ago," Beliūnas added in his post.
The news outlet reports the business will now initiate bankruptcy filings across its operational territories, including the US, UK, Singapore, UAE and India.
The statement from Builder.ai added: "Despite the tireless efforts of our current team and exploring every possible option, the business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position.
"Our immediate priority is to support our employees, customers, and partners through this difficult time.
"We will work closely with the appointed administrators to ensure an orderly process and to explore all available options for parts of the business, where possible.
"We want to extend our sincere gratitude to our employees for their commitment and hard work, to our customers for their loyalty, and to our partners and suppliers for their support over the years."
Topics: Artificial Intelligence, World News, Technology
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