Builder.ai files for bankruptcy after revenue questions

Builder.ai, a Microsoft-backed startup that marketed an AI-assisted platform for app development, has filed for bankruptcy in the U.S. and may pursue similar proceedings in the UK and India. The company said on LinkedIn that it would enter insolvency proceedings and appoint an administrator to manage its affairs.

The startup pitched clients on building apps through conversations with Natasha, its AI assistant, supported by human engineers. A viral claim that Builder.ai hired 700 engineers in India to pose as Natasha has been disputed by the company, while a Financial Times report also cast doubt on that account. Earlier scrutiny from The Wall Street Journal said Builder.ai had been accused of exaggerating its AI capabilities.

Financial pressure appears to have driven the collapse. The Financial Times reported that Builder.ai overstated sales by as much as four times and faced major debt problems. Bloomberg reported that a lender seized $37 million after discovering the company generated just $50 million in revenue, 300 percent lower than its $220 million claim. The Financial Times also reported that Builder.ai owes Amazon Web Services $88 million and Microsoft $30 million for cloud services.