Bankrupt Microsoft-Backed ‘AI’ Company Was Using Indian Engineers To Fake It: Report

Last week, British AI startup backed by Microsoft and the Qatar Investment Authority, Builder.ai, filed for bankruptcy after its CEO said a major creditor had seized most of its cash. 

Valued at $1.5 billion after a $445 million investment by Microsoft, the company claimed to leverage artificial intelligence to generate custom apps in ‘days or weeks,’ which would produce functional code that had less human involvement. 

Now they’ve gone cloth-off… as Bloomberg reports they had a ‘fake it till you make it’ strategy while having inflated 2024 revenue projections by 300%. Instead of AI, the company was actually using a fleet of more than 700 Indian engineers from social media startup VerSe Innovation for years to actually write the code. 

Requests for custom apps were based on pre-built templates and later customized through human labor to tailor the requests sent to the company – whose demos and promotional materials misrepresented the role of AI. 

According to Bloomberg, Builder.ai and VerSe Innovation ‘routinely billed one another for roughly the same amounts between 2021 and 2024,’ in an alleged practice known as “round-tripping” that people said Builder.ai used to inflate revenue figures that were then presented to investors. In several cases, products and services weren’t actually rendered for these payments. 

Builder.ai collected close to $60 million in revenue from VerSe in the four-year period for services such as application development, according to people with knowledge of the situation. In turn, the AI startup sent funds to VerSe and its subsidiary, Quark Media Tech, for services such as marketing, the documents show. The two companies appear to have interspersed the timing and amount of the invoices to avoid suspicion, though each firm ultimately spent approximately the same amount, according to the people and documents. -Bloomberg

VerSe cofounder Umang Bedi said the claims are “absolutely baseless and false,” adding “We’re not the kind of company that is in the business of inflating revenues,” and insisting that the accusations of round tripping are “defamatory and irresponsible.” 

The company is now under investigation by US and UK authorities.  

The Natasha neural network turned out to be 700 Indian programmers

The startup BuilderAI offered to write any application, like in a constructor, by selecting the necessary functions.

In reality, customer requests were sent to the Indian office, where 700 Indians wrote code… pic.twitter.com/lYWipf63cp

— Bernhard Engelbrecht (@BernhardEngel_) May 29, 2025

Last week, Bloomberg reported that Viola Credit – which provided $50 million in debt to the software firm last year, had seized $37 million from Builder.ai’s accounts - leaving the company with just $5 million, CEO Manpreet Ratia said in a Tuesday interview, where he announced the decision to let go most of Builder.ai’s employees, and said that the $5 million is located in Indian accounts and  could not be accessed to pay workers due to restrictions on the movement of money out of the country. 

The proceedings mark a stunning fall from grace for a company that two years ago raised a $250 million funding round led by QIA, one of the world’s biggest sovereign wealth funds. Microsoft also made an equity investment in 2023 as part of a strategic partnership. Less than two months ago, Builder.ai confirmed to Bloomberg News that it had been forced to lower sales estimates provided to investors and had hired auditors to examine two years of accounts. This came in response to questions from Bloomberg about former employees’ concerns that the company inflated sales figures. -Bloomberg

The company’s deception was first suggested in 2019 in a WSJ report that questioned the company’s AI claims – revealing that the platform relied heavily on human contractors, with several former employees describing the operation as “all engineer, no AI,” with most of that work being done manually by staff in India.