London AI startup Builder.ai collapses after 'human-powered' tech revelation

Builder.ai, a company that attracted global attention and raised $445 million in investment from the likes of Microsoft, has officially entered insolvency in the UK. The startup pitched itself as a groundbreaking “no-code” platform where users could create apps quickly using a virtual assistant called “Natasha”. The idea was that software could be built as easily as snapping together Lego bricks—with AI doing most of the work.

However, the truth was far less high-tech. According to claims made by Bernhard Engelbrecht, founder of Ebern Finance, Builder.ai’s platform relied on around 700 engineers based in India who manually wrote code based on customer requests. Despite the company marketing it as AI-generated, most of the work was done by humans behind the scenes. Engelbrecht described the whole setup as something that “looked like real AI—except it wasn’t”. Many of the resulting apps, he added, were buggy and difficult to maintain.

Financial trouble soon followed. Earlier this year, Builder.ai defaulted on a $50 million loan from Viola Credit. The lender quickly seized $37 million from the company’s accounts, leaving Builder.ai unable to pay staff or continue its operations. Bloomberg also reported that other funds in India were frozen due to regulatory issues.

Builder.ai is now under formal insolvency proceedings in the UK. A court-appointed administrator has taken over to see what can be recovered. In a post on LinkedIn, the company admitted that previous decisions had brought it to the point of no return. It said it was working with the administrator and thanked its staff and partners for their support during what it called a “difficult time”.

The collapse has raised fresh concerns about the AI startup boom. Experts say the hype around artificial intelligence often moves faster than the actual technology, and that investors sometimes back big promises without fully understanding what they’re funding. Phil Brunkard of Info-Tech Research Group told Business Today that many AI startups have grown too quickly, without strong business models or genuinely new tech.

Once viewed as a rising star in AI-driven app development, Builder.ai’s fall is a cautionary tale—about overpromising, underdelivering, and the risks of putting marketing gloss ahead of substance.

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