The Easiest Billion-Dollar Fraud: Builder.ai
How one of the most hyped AI startups of the decade, backed by Microsoft and fueled by $445 million, used fake numbers to lie to everyone
Introduction
Builder.ai was once the darling of the AI boom. Microsoft-backed, Qatar-funded, & hyped as the “Uber Eats” of app development. Just tell its bubbly assistant “Natasha” what you want, and boom, your dream app built by AI. Or at least, that was the pitch.
Flush with $445 million in funding, it was Silicon Valley’s latest no-code fairy tale.
Just now, it collapsed.
The Collapse
In May 2025, Builder.ai filed for bankruptcy (meaning they couldn’t pay their bills & had to shut down), leaving millions in unpaid debts and half-finished projects. But bankruptcy was only the surface story.
Underneath the headlines were three ugly truths:
Faked financials: They cooked their numbers to look way better than reality.
AI-washing: Pretending their tech was powered by smart AI when it wasn’t.
Round-tripping: A shady cash shuffle between Builder.ai and VerSe Innovation (owners of popular apps Dailyhunt and Josh) that made their revenue (how much money they make) look bigger than it actually was.
What is Round-Tripping?
Round-tripping is like two siblings “buying and selling” the same old toy back & forth to impress their parents with how much money they’re making, except no real money changes hands.
Two companies send fake invoices and payments to each other just to pump up revenue numbers. It’s all a show to appear big and successful.
Men Lie, Women Lie, But Do the Numbers?
Builder.ai told investors they made $220 million in 2024. The real number? Just $55 million. That’s a 300% exaggeration.
By the time the truth emerged, Builder.ai was drowning in debt:
$50 million owed to Viola Credit
$85 million to AWS
$30 million to Microsoft
Things got worse fast. In April 2025, Viola froze $37 million of Builder.ai’s accounts, leaving them with only $5 million in cash.
And that was basically the end.
The AI That Wasn’t
Builder.ai talked a big game about being an AI-powered no-code wonder, but the truth? It was mostly people doing the work.
Instead of Natasha, the friendly chatbot writing code, there were hundreds of engineers in India and Ukraine grinding away behind the scenes, building apps by hand.
Fallout: Employees, Founders, and the Public
By early 2025, founder Sachin Dev Duggal had already stepped down, handing the mess to Manpreet Ratia, a former Amazon exec who tried to stop the bleeding.
He laid off 270 people, but it was too little, too late.
After Viola froze their bank account, Builder.ai disappeared off the grid. The website vanished, replaced only by a lonely support email.
Customers, some of whom had paid tens of thousands, were left high and dry.
My Opinion: Why This Should’ve Been Caught Sooner
Having audited many startups, I’m confident this fraud should have been spotted early. Here’s why:
Transaction logs are a goldmine: Builder.ai kept detailed records of every $ coming in and out. Auditors start by digging into these logs, using tools to spot anything unusual.
Auditors expect tricks: It’s no secret startups sometimes fudge numbers. Good auditors know exactly where to look, it’s not a needle-in-a-haystack situation.
Red flags were everywhere: If there are massive jumps in the money you are making combined with money bouncing back and forth like a hot potato, these patterns scream trouble if you pay attention.
It’s shockingly easy to fake financials: It’s surprisingly easy for numbers to look convincing, even when they’re not. If no one looks too closely, it’s easy for mistakes, or even made-up figures, to slip through.