Indian AI Startup Worth Billions Turns Out to Be Biggest Scam

Indian AI unicorn, Builder.AI, has just spectacularly collapsed, laying off all of its employees and entering insolvency proceedings. The startup, which was worth $1.5 billion and raised over half a billion, with major investments from Microsoft, SoftBank, and other tech giants, was apparently completely faking its “AI backend.”

Founded in 2016, Builder.ai promised to revolutionize app development, making it “as easy as ordering pizza.” The company, led by India’s AI poster boy Sachin Dev Duggal (who later awarded himself the whimsical title “Chief Wizard”), managed to charm investors out of nearly half a billion dollars, including heavyweight backers Microsoft, SoftBank, and the Qatar Investment Authority.

Sachin Dev Duggal

The Great AI Pretender

According to multiple reports, Builder.ai’s vaunted AI technology was actually just a group of human developers in India manually writing code behind the scenes. As Brobible reports, “multiple current and former employees reported that some pricing and scheduling calculations were done by traditional software, with most of the remaining work done manually by employees.”

Duggal also allegedly inflated the company’s revenue figures by a staggering 300% to investors. An internal audit reportedly revealed the company’s actual revenue was just $55 million, not the $220 million claimed.

How it Ended

The end came swiftly this month when creditor Viola Credit, which had lent Builder.ai $50 million in 2023, seized $37 million from the company’s accounts. With only $5 million left (which was restricted by government regulations), the company couldn’t even meet payroll.

On May 21, 2025, Builder.ai announced it was entering insolvency proceedings, with a terse LinkedIn statement lamenting “historic challenges and past decisions that placed significant strain on its financial position.”

Legal Troubles Mount

Adding to the company’s woes, Duggal has been named as a suspect in a money laundering investigation in India, while another co-founder, Saurabh Dhoot, faces accusations in a loan fraud case, according to court documents obtained by the Financial Times.

Duggal had already stepped down as CEO in February 2025, replaced by Manpreet Ratia, who was brought in to “clean up” the mess, though Duggal maintained his “Chief Wizard” title until the bitter end.

The Builder.ai debacle represents one of the largest collapses in the AI startup world. It serves as a sobering reminder that in the gold rush of AI investment, not all that glitters is intelligent.

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