Builder.ai collapse: London startup used 700 Indian engineers to mask AI claims

Builder.ai promoted its platform as an AI-powered tool named “Natasha” that assembled software like modular components, but reports reveal over 700 developers in India manually handled customer requests instead of the claimed AI automation

Once seen as a rising star in the artificial intelligence landscape, Builder.ai has filed for insolvency in the UK after revelations that its much-hyped no-code platform was largely powered by human labour, not AI. The company, which had secured significant backing from Microsoft, is now under fire for allegedly misrepresenting the role of automation in its core offering.

Builder.ai marketed its platform as an AI-driven solution for building custom software through a virtual assistant named “Natasha.” Customers were led to believe that the platform used AI to assemble apps like modular components. However, recent reports suggest that customer requests were actually routed to a team of over 700 developers in India who manually wrote the code.

Bernhard Engelbrecht, founder of Ebern Finance, publicly criticized the company's approach, stating on X (formerly Twitter) that the process was “like real artificial intelligence — except that none of it was.” He further noted that the final products were often riddled with bugs and difficult to maintain.

Loan default triggers business collapse

The company’s downfall accelerated when it defaulted on a $50 million loan from Viola Credit, which responded by seizing $37 million in assets. This severely restricted Builder.ai’s ability to pay employees and continue operations. Additional funds held in Indian accounts remain frozen due to regulatory barriers, according to reports.

Now under formal insolvency proceedings, a UK court has appointed an administrator to oversee the process, assess liabilities, and explore asset recovery. In a brief statement on LinkedIn, Builder.ai admitted to "early missteps" that had pushed the business "beyond recovery" and declined to comment further due to legal constraints.

Transparency spotlight on AI startups

Amid the fallout, Indian tech unicorn VerSe Innovation has come under scrutiny due to a previous partnership with Builder.ai. However, VerSe co-founder and former Facebook India head Umang Bedi has denied any involvement in financial misconduct. Speaking to Bloomberg, Bedi called the allegations “absolutely baseless and false,” emphasizing that all transactions with Builder.ai were legitimate and appropriately recorded.