UK-based AI startup Builder.ai reportedly filed for bankruptcy in a Delaware court on 2 June after creditors seized the majority of the company’s funds.
According to Bloomberg, filings revealed the start-up had overstated its 2024 sales projections by 300 per cent, leading to the cash seizure.
Among the list of creditors published by the company in its filings are Amazon, Microsoft, US law firm Quinn Emanuel, and Israeli private intelligence company Shibumi Strategy, Financial Times added.
The London-based start-up, once valued at $1.5 billion, also allegedly fabricated deals with Indian social media company VerSe Innovation in an attempt to inflate revenue. Since, VerSe co-founder Umang Bedi has denied the allegations, calling them “baseless and false”, Bloomberg reported.
The company’s troubles intensified in early 2025 when founder Sachin Dev Duggal (pictured), a keynoter at MWC2025, stepped down as CEO in February, losing control of his majority in board seats. Manpreet Ratia, an executive from investor Jungle Ventures, subsequently took the helm and launched an audit of the company’s 2023 and 2024 accounts.
Builder.ai reportedly issued a warning to staff in May about a potential insolvency filing, stating the business was unable to financially recover from “historic challenges and past decisions”. By this time, a group of creditors led by asset manager Viola Credit had already seized most of the company’s cash.
Builder.ai’s downfall marks one of the most high-profile collapses in the AI sector since the launch of ChatGPT sparked a global investment surge.