It turns out that the coding AI provided by a bankrupt AI company was actually a human-powered service provided by 700 engineers



Builder.ai, an AI company that was hailed as an innovative AI startup backed by Microsoft, offered a 'no-code development platform' that allowed developers to develop without writing source code. However, it was reported that the service was not actually based on AI but on human wave tactics by 700 Indian engineers, and the company was forced into bankruptcy.

Builder.ai Faked Business With Indian Firm VerSe to Inflate Sales, Sources Say - Bloomberg

https://www.bloomberg.com/news/articles/2025-05-30/builder-ai-faked-business-with-indian-firm-verse-to-inflate-sales-sources-say

'700 Indian engineers posed as AI': The London startup that took Microsoft for a ride - BusinessToday
https://www.businesstoday.in/technology/news/story/700-indian-engineers-posed-as-ai-the-london-startup-that-took-microsoft-for-a-ride-478514-2025-05-31

VerSe Innovation allegedly billed Builder.ai without services; Indian company denies claims - The Economic Times
https://economictimes.indiatimes.com/tech/startups/verse-innovation-allegedly-billed-builder-ai-without-services-indian-company-denies-claims/articleshow/121537284.cms

Builder.ai advertised its service as being run by an AI assistant called 'Natasha' that could assemble software applications like Lego blocks.

Builder.ai has also notably received investment from Microsoft, which announced plans to integrate Builder.ai into its cloud and Teams products. 'We see Builder.ai as creating an entirely new category that empowers everyone to be a developer,' Microsoft Corporate Vice President John Tinter said at the time.

However, behind the scenes, it was discovered that customer requests were being processed manually by human developers rather than by AI, which has caused quite a stir.



Bernhard Engelbrecht, founder of Ebern Finance, an investment firm that specializes in fintech, said, 'The neural network called Natasha was made up of 700 Indian programmers. The startup Builder.ai offered to create any application, such as a constructor, by selecting the required functions, but in reality, customer requests were sent to an office in India, where 700 Indians, not AI, wrote the code. This fraud led to the startup raising $445 million (about 64 billion yen) in investments from major IT companies, including Microsoft, over eight years. However, the applications that were supposed to be 'created by AI' frequently malfunctioned, the code was indecipherable, the functions did not work, and as a result, it really looked like it was created by AI. And after the fraud was discovered, the startup officially went bankrupt.'



The bankruptcy began when Viola Credit, an asset management company that had lent Build.ai $50 million in 2023, seized the company's assets after the company defaulted on its debt. This action left Build.ai unable to operate its business and pay its employees, leading to the situation reported this time.

Builder.ai has now entered formal insolvency proceedings in the UK, with a court-appointed receiver considering how to recover assets or salvage parts of the business. In a statement, the company acknowledged that 'early missteps have left it in an irrecoverable position,' but declined to comment on pending legal matters.



In this scandal, VerSe Innovation, an Indian content distribution platform that has had a business partnership with Builder.ai since around 2021, is also suspected of engaging in circular transactions by making fictitious transactions with each other to inflate sales.

The company's co-founder, Umang Bedi, who is also known for his work with Facebook in India, denied any involvement in financial wrongdoing, saying, 'These are completely baseless rumours. We are not a company that inflates revenue.'

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in Software, Posted by log1l_ks