Builder.ai, the once-celebrated British artificial intelligence startup, now faces bankruptcy after a series of financial setbacks and internal missteps. The company, backed by tech giant Microsoft and the Qatar Investment Authority (QIA), confirmed that it will initiate bankruptcy proceedings across multiple jurisdictions. The trigger came when Viola Credit, a major creditor, seized $37 million from Builder.ai’s accounts, leaving the company nearly insolvent.
A Rapid Decline
Chief Executive Officer Manpreet Ratia disclosed in an interview on May 20 that Builder.ai currently holds only $5 million in its Indian accounts, which it cannot use to pay global employees due to currency transfer restrictions. This development forced Ratia to make a harsh but inevitable decision—he laid off the majority of Builder.ai’s workforce.
Viola Credit, which extended a $50 million debt facility to Builder.ai last year, has remained silent on the exact reason behind the asset seizure. The absence of a clear explanation only adds to the growing list of questions about Builder.ai’s financial management and governance practices.
A Global Footprint Collapses
Builder.ai operated across five regions: the United Kingdom, the United States, India, the United Arab Emirates, and Singapore. Ratia confirmed that the firm would file for bankruptcy in accordance with the legal procedures of each of these jurisdictions. These filings will mark the end of an ambitious journey for a startup that once promised to democratize software development using artificial intelligence.
Just two years ago, Builder.ai had raised a staggering $250 million in a funding round led by QIA, one of the world’s largest sovereign wealth funds. Microsoft joined the cap table in 2023, reinforcing the company’s status as a premier AI venture in Europe. However, the promise of transforming the software development landscape now lies in ruins.
Financial Warnings and Management Shakeup
Builder.ai began to show signs of instability in early 2024. Several former employees raised alarms about inflated sales figures, prompting scrutiny from investors and journalists. In response, the company lowered its internal sales estimates and hired auditors to examine its financial statements for the past two years. These actions came far too late to prevent the downward spiral.
In February 2025, the company replaced its founder and then-CEO Sachin Dev Duggal with Manpreet Ratia. Alongside this leadership change, Builder.ai downsized its board from nine to five members and forced Duggal to relinquish four of the five seats he controlled. These drastic steps signaled deep-rooted concerns about governance and control.
Despite these efforts, the company struggled to recover. In a public statement released on May 20, Builder.ai admitted that “historic challenges and past decisions” created insurmountable financial pressure. The firm will now appoint an administrator to oversee its affairs during the bankruptcy process.
Misplaced Investor Confidence
Builder.ai’s dramatic collapse highlights the risks of aggressive investment in emerging AI startups. Since OpenAI’s breakthrough with ChatGPT, investors have scrambled to find the next revolutionary platform in artificial intelligence. London-based Builder.ai attracted significant interest by promising a no-code, AI-driven platform that could build software applications for businesses of all sizes.
For a while, the vision worked. Media coverage celebrated the company’s growth, and global investors saw it as a key player in the AI revolution. However, behind the scenes, financial irregularities and overestimated performance painted a different picture.
The company failed to convert investor capital into sustainable revenue. Instead, it spent heavily to grow its operations and market its products, all while its actual sales lagged far behind the projections shared with stakeholders. These exaggerated numbers formed a fragile house of cards that collapsed under the weight of debt and scrutiny.
Employee Fallout
The fallout extended far beyond boardrooms and balance sheets. The seizure of company funds effectively froze payrolls, affecting hundreds of employees across multiple continents. Ratia explained that although Builder.ai retains $5 million in its Indian accounts, it cannot legally repatriate those funds to pay employees in other countries due to regulatory constraints.
The abrupt layoffs left many employees without compensation or severance. Workers who joined the company under the impression of long-term stability now find themselves navigating job markets amidst a wave of AI-industry layoffs. This episode serves as a cautionary tale about due diligence, even in high-growth tech sectors.
Regulatory Implications
Builder.ai’s collapse will likely attract regulatory attention, especially concerning corporate governance and financial disclosures. Investor watchdogs may investigate whether Builder.ai misled stakeholders through inflated revenue estimates or inadequate reporting practices.
Furthermore, the financial sector will analyze the role of Viola Credit in this unraveling. Though creditors hold the right to reclaim debts under certain conditions, the sudden seizure of funds raises questions about Builder.ai’s adherence to debt covenants or potential loan defaults.
While Viola Credit has yet to clarify its actions, legal and regulatory bodies may soon seek a transparent account of how and why the $37 million was seized—and whether any violations occurred in the process.
Impact on Microsoft and QIA
Microsoft and QIA, two of Builder.ai’s biggest backers, have refrained from issuing public comments. Their silence reflects the sensitivity surrounding the collapse, especially since both organizations face reputational risks. Microsoft’s investment in Builder.ai aligned with its broader AI strategy, including its partnerships with OpenAI and enterprise-focused tools powered by Azure.
This failure will not derail Microsoft’s AI ambitions, but it will likely influence how the tech giant approaches due diligence in future strategic investments. QIA, with its vast portfolio, can absorb the loss financially, but the episode may compel it to tighten controls when backing nascent tech ventures.
Lessons for the AI Industry
Builder.ai’s bankruptcy underscores the volatility in the AI startup ecosystem. While enthusiasm for artificial intelligence remains strong, not every company in the space offers long-term value or operational maturity. Investors must differentiate between truly innovative platforms and those riding the hype cycle.
Founders, too, must recognize that growth alone doesn’t guarantee sustainability. Solid financial controls, transparency, and measured scaling remain critical. Builder.ai had vision, capital, and global presence—but failed to establish a resilient operational model.
The End of the Road
With its operations suspended, workforce dismantled, and legal proceedings imminent, Builder.ai has effectively reached the end of the road. What started as a bold attempt to revolutionize software development using artificial intelligence has ended in financial distress and corporate collapse.
As the industry absorbs the fallout, startups, investors, and regulators will reflect on what went wrong. For now, Builder.ai serves as a stark reminder that in the world of emerging technologies, promise without discipline often leads to downfall.