'700 Indian engineers posed as AI': The London startup that took Microsoft for a ride

Builder.ai, once touted as a revolutionary AI startup backed by Microsoft, has collapsed into insolvency after revelations that its flagship no-code development platform was powered not by artificial intelligence—but by 700 human engineers in India.

The company marketed its platform as being driven by an AI assistant named “Natasha,” which could supposedly assemble software applications like Lego bricks. But recent reports and commentary have revealed that behind the scenes, customer requests were manually fulfilled by developers, not machines.

Commenting on the unraveling, Ebern Finance founder Bernhard Engelbrecht described it in a widely circulated post on X: “Customer requests were sent to the Indian office, where 700 Indians wrote code instead of AI,” adding that the end products were often buggy, dysfunctional, and difficult to maintain. “Everything was like real artificial intelligence — except that none of it was.”

The downfall began when Viola Credit, a lender that extended $50 million to Builder.ai in 2023, seized $37 million after the company defaulted. That move paralyzed the startup’s ability to operate or pay employees. Additional funds held in India remain frozen due to regulatory restrictions, Bloomberg reported.

Builder.ai has now entered formal insolvency proceedings in the UK, with a court-appointed administrator assessing how to recover assets or salvage parts of the business. In a LinkedIn statement, the company acknowledged its “early missteps” had pushed it “beyond recovery,” and it declined to comment further on pending legal matters, including a subpoena.

Amid the fallout, VerSe Innovation’s name has surfaced due to its business association with Builder.ai, which began around 2021. This link has drawn attention amid broader scrutiny of Builder.ai’s financial practices. However, Umang Bedi, VerSe co-founder and former Facebook India MD, denied any role in financial misconduct.

In an interview to Bloomberg, Bedi called the allegations “absolutely baseless and false,” asserting that VerSe neither inflated revenues nor billed for unrendered services. “We’re not the kind of company that is in the business of inflating revenues,” he said, emphasizing no irregularities in payments or services exchanged with Builder.ai.