The $1.5 billion AI startup Builder.ai has filed for bankruptcy after revelations that it used human developers instead of artificial intelligence. Vinay Patel reports for International Business Times that the company’s supposed AI system was actually operated by 700 Indian programmers pretending to be automated bots.
Builder.ai raised over $450 million from prominent investors including Microsoft, the Qatar Investment Authority, and the World Bank’s IFC since 2016. The company promised businesses they could build custom applications using AI technology with minimal coding required.
The collapse began when lender Viola Credit seized $37 million from company accounts, leaving only $5 million in restricted funds. Former employees had previously raised concerns about inflated sales figures presented to investors.
The Qatar Investment Authority faces the largest losses, having led a $250 million funding round two years ago. Competition regulators are now examining Builder.ai’s marketing practices, raising questions about transparency in AI startup claims.