Latest news with #BuilderAI
The National
4 days ago
- Business
- The National
Former Builder.ai CEO Sachin Dev Duggal withdrawn from tech conference amid controversy
Sachin Dev Duggal, founder of the now-defunct artificial intelligence start-up has been pulled from the speakers line-up at a technology conference in Paris. Former employees emailed the organisers of the Raise Summit − which ended on Wednesday − with complaints over the nature of the company's demise. In May, Mr Duggal's former company, which had offices in London, New York and Dubai, began insolvency proceedings. An email provided to The National by Raise organisers said Mr Duggal had been invited to speak to hopefully provide an insight into how the company's fortunes turned. But they said they received 'numerous emails", including from employees who lost their jobs, Raise said. 'However, given the security concerns and the fact that we did not have full clarity on the story, we ultimately decided not to move forward featuring him at the event.' This is the latest in a series of incidents that have marked the fall of a company that once achieved unicorn status − receiving a valuation of more than $1 billion − and a significant investment from US technology giant Microsoft. Some workers at the company have told The National that on legal advice, they had been told to preserve documents and other evidence that may relate to a possible criminal investigation. Some also said they had been issued subpoenas from the US Attorney's Office in Manhattan. In 2024, Mr Duggal briefly spoke to The National as he appeared at an event hosted by the Dubai Multi Commodities Centre, which had just announced a new AI centre. 'With this centre, we're helping to unveil a portal to global commerce,' Mr Duggal said then, reflecting on why chose DMCC as an ecosystem partner. 'We didn't want to be a software company just surrounded by other software companies, we wanted to be surrounded by potential customers and peers.' Yet ultimately, failed to meet revenue expectations. The company had promised to make mobile app development as 'easy as buying a pizza' through the use of heavily promoted AI technology, but it struggled to create reliable products, disappointing investors such as Microsoft and sovereign wealth funds in Qatar. To try to stabilise the situation, Mr Duggal requested more investment funds, and an emergency loan, months before he was stripped of the chief executive title. There have been allegations of financial irregularities, while the legitimacy of the company's AI technology has also been questioned in recent months by several news outlets. In May, Mr Duggal posted a message on LinkedIn within a alumni group created on the platform. 'I don't think the story is done yet, but irrespective, if I can be of any help to any of you as you make this transition in life please know I'm only a message away,' he posted in part. 'And more importantly – if I didn't listen, if I was short, if I was unreasonable – I'm sorry.' On main LinkedIn page, comments from unhappy former customers are plentiful. 'What are you doing to get all of your customers their code for completed apps they paid for?' one person wrote. 'Don't believe these fancy conferences, flying around, inviting celebrities … It's all hype and nonsense,' wrote another, referring to the various events where Mr Duggal often dispensed start-up wisdom. A WhatsApp group created by former employees is full of criticisms as well, with some making allegations about not being paid for work done.
Yahoo
7 days ago
- Business
- Yahoo
Hundreds of staff unpaid after £1bn AI start-up goes bust
Hundreds of former staff at a collapsed AI company once worth £1bn have been left unable to access redundancy payments amid talks over a fire sale of its assets. Workers claim to have been left in limbo after being let go from the failed British AI champion in May. While Builder AI has filed for bankruptcy in the US, it has yet to appoint administrators in Britain where its main operations were based. This has meant around 200 UK-based staff cannot claim redundancy pay from the Insolvency Service, which requires a case number normally supplied by restructuring advisers in the event of an administration. A Builder AI spokesman said it was 'aware of the frustration' of staff, and confirmed investors and creditors were in advanced talks over a potential pre-pack administration, which would see its remaining assets and technology sold. Builder AI has been lining up Alvarez & Marsal, a restructuring consultancy, to handle the administration. One former Builder AI employee complained that they had been left in the dark during the process. They said: 'There's been no communication, no proper closure, and without the right paperwork, a lot of us still can't access the financial help we need.' Former UK employees have not received any money since April. The Telegraph understands that Jungle Ventures, Lakestar and US fund Insight Partners are among the parties involved in advanced talks to salvage parts of the business in a pre-pack deal. Such a deal should raise money to return funds to creditors, including ex-staff. Sachin Dev Duggal, Builder AI's founder, is also understood to have explored launching a rescue bid alongside other investors. However, a source close to the talks said this approach was rebuffed. Builder AI was backed by Microsoft and Qatar's sovereign wealth fund, and reached a valuation of $1.5bn (£1.1bn), making it one of Britain's rare 'unicorns' – a private tech company worth more than a billion. But it collapsed in May after lenders pulled tens of millions of pounds in funding amid claims that promised sales had come in far below expectations. The start-up was founded by 42-year-old Mr Duggal in 2016, and developed what he called 'human-assisted AI'. A chatbot called Natasha was assisted by human contractors to help customers, including the BBC, build apps cheaply. The venture unravelled after it emerged that sales forecasts had been wildly unrealistic. The business had predicted sales of $220m in 2024 when raising money from lenders. Sales for that year ultimately came in at around $50m. Mr Duggal was ousted in February and replaced by Manpreet Ratia, of investor Jungle Ventures. The company's lenders, including tech investor Viola Credit, then pulled $40m from the business's accounts, citing covenant breaches. That decision left the business with almost no cash available to pay staff. The Telegraph understands that New York prosecutors had issued a subpoena to Builder AI prior to its collapse for information about its accounting practices. The Financial Times reported that an investigation into the sales shortfall at Builder AI had raised concerns over potentially inflated sales and circular transactions in past years. A spokesman for Mr Duggal declined to comment. On LinkedIn, he said last month: 'There was no round-tripping,' referring to the allegations of circular transactions. A spokesman for Builder AI said: 'We are working closely with the US administrator to initiate liquidation proceedings for the UK entity. 'The company has actively explored the option of a pre-packaged administration. The company has been actively seeking funding from existing stakeholders. We are now at the conclusion of this process and expect to proceed with formal filings in the UK next couple of weeks.' Alvarez & Marsal and Lakestar declined to comment. Insight Partners was contacted for comment. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
06-07-2025
- Business
- Telegraph
Hundreds of staff unpaid after £1bn AI start-up goes bust
Hundreds of former staff at a collapsed AI company once worth £1bn have been left unable to access redundancy payments amid talks over a fire sale of its assets. Workers claim to have been left in limbo after being let go from the failed British AI champion in May. While Builder AI has filed for bankruptcy in the US, it has yet to appoint administrators in Britain where its main operations were based. This has meant around 200 UK-based staff cannot claim redundancy pay from the Insolvency Service, which requires a case number normally supplied by restructuring advisers in the event of an administration. A Builder AI spokesman said it was 'aware of the frustration' of staff, and confirmed investors and creditors were in advanced talks over a potential pre-pack administration, which would see its remaining assets and technology sold. Builder AI has been lining up Alvarez & Marsal, a restructuring consultancy, to handle the administration. One former Builder AI employee complained that they had been left in the dark during the process. They said: 'There's been no communication, no proper closure, and without the right paperwork, a lot of us still can't access the financial help we need.' Former UK employees have not received any money since April. The Telegraph understands that Jungle Ventures, Lakestar and US fund Insight Partners are among the parties involved in advanced talks to salvage parts of the business in a pre-pack deal. Such a deal should raise money to return funds to creditors, including ex-staff. Sachin Dev Duggal, Builder AI's founder, is also understood to have explored launching a rescue bid alongside other investors. However, a source close to the talks said this approach was rebuffed. Builder AI was backed by Microsoft and Qatar's sovereign wealth fund, and reached a valuation of $1.5bn (£1.1bn), making it one of Britain's rare 'unicorns' – a private tech company worth more than a billion. But it collapsed in May after lenders pulled tens of millions of pounds in funding amid claims that promised sales had come in far below expectations. The start-up was founded by 42-year-old Mr Duggal in 2016, and developed what he called 'human-assisted AI'. A chatbot called Natasha was assisted by human contractors to help customers, including the BBC, build apps cheaply. The venture unravelled after it emerged that sales forecasts had been wildly unrealistic. The business had predicted sales of $220m in 2024 when raising money from lenders. Sales for that year ultimately came in at around $50m. Mr Duggal was ousted in February and replaced by Manpreet Ratia, of investor Jungle Ventures. The company's lenders, including tech investor, Viola Credit, then pulled $40m from the business's accounts, citing covenant breaches. That decision left the business with almost no cash available to pay staff. The Telegraph understands that New York prosecutors had issued a subpoena to Builder AI prior to its collapse for information about its accounting practices. The Financial Times reported that an investigation into the sales shortfall at Builder AI had raised concerns over potentially inflated sales and circular transactions in past years. A spokesman for Mr Duggal declined to comment. On LinkedIn, he said last month: 'There was no round-tripping,' referring to the allegations of circular transactions. A spokesman for Builder AI said: 'We are working closely with the US administrator to initiate liquidation proceedings for the UK entity. 'The company has actively explored the option of a pre-packaged administration. The company has been actively seeking funding from existing stakeholders. We are now at the conclusion of this process and expect to proceed with formal filings in the UK next couple of weeks.'
Sustainability Times
11-06-2025
- Business
- Sustainability Times
Shocking Revelation in Tech Industry: A 1.5 Billion Dollar 'Fake AI' Exposed With 700 Real-Time Coders Operating From India
IN A NUTSHELL 🔥 , a British startup, was exposed for using 700 engineers in India instead of advanced AI technology to code applications. , a British startup, was exposed for using 700 engineers in India instead of advanced technology to code applications. 💰 The company raised over $480 million from investors like Microsoft, only to inflate revenue projections by 300% and face financial turmoil. ⚖️ Ongoing investigations include a UK insolvency process and a US federal probe, with founder Sachin Dev Duggal facing money laundering allegations in India. 🌐 The scandal highlights the widespread issue of 'AI washing' in the tech industry, where human labor is misrepresented as AI work. In the fast-paced world of technology, the allure of artificial intelligence (AI) often promises to streamline processes and reduce human intervention. However, the story of a British startup once valued at $1.5 billion, reveals a darker side to this narrative. The company, which claimed to revolutionize app development through AI, was found to rely heavily on manual coding by 700 engineers in India. As the facade crumbled, it became a cautionary tale of how technological advancements can sometimes mask traditional labor practices. This incident underscores the importance of transparency and ethical practices in the tech industry. The Illusion of Revolutionary AI led by founder Sachin Dev Duggal, captivated investors with the promise of making app creation as easy as ordering a pizza. The centerpiece of this promise was a virtual assistant named 'Natasha,' heralded as a groundbreaking AI capable of developing custom applications with minimal coding. However, beneath this innovative veneer, the reality was starkly different. Reports revealed that the so-called AI relied on the relentless work of 700 developers in India, who manually coded applications based on client requests. This labor-intensive process was cleverly hidden behind the guise of sophisticated AI technology, misleading investors and clients alike. With financial backing from notable entities like Microsoft and the Qatar Investment Authority, successfully raised over $480 million. Yet, the company's house of cards began to tumble when the truth emerged. The reliance on human coders instead of advanced AI technologies exposed the firm to scrutiny and led to an investigation into its operational practices. This revelation not only shocked the tech community but also raised questions about the legitimacy of AI claims in the industry. 'Nasa Confirms the Unthinkable': China's Giant Water Diversion Project Will Slow Earth's Rotation and Disrupt Global Timekeeping Financial Fallout and Investigations The unraveling of operations had severe financial repercussions. Viola Credit, an investor, withdrew $37 million from the company after discovering that projected revenues had been inflated by 300%. The startup's forecasted revenue of $220 million was a gross exaggeration, with audits revealing actual figures closer to $50 million. This misrepresentation led to a liquidity crisis, leaving the company with only $5 million in accessible funds, which were subsequently frozen due to legal restrictions. The financial turmoil prompted Manpreet Ratia, appointed as president after the resignation of his predecessor, to file for bankruptcy. As the company navigates insolvency proceedings in the UK, US prosecutors have launched a federal investigation, demanding the company's financial records and client lists. Additionally, founder Sachin Dev Duggal faces allegations of money laundering in India, further complicating the legal landscape surrounding Earth Is Slowing Down as China's Gigantic Water Project Forces a Planetary Shift Confirmed by NASA's Latest Alarming Report A Widespread Phenomenon The scandal is not an isolated incident. The practice of 'AI washing,' where companies attribute human work to AI, is becoming alarmingly common. Amazon faced a similar controversy with its 'Just Walk Out' technology, which involved over 1,000 human operators in India. Additionally, several accounting services, advertised as automated, were found to employ Filipino workers for manual tasks. This deceptive practice raises ethical concerns about the transparency and integrity of AI claims in the tech industry. The repercussions of such practices extend beyond financial deceit. They affect the livelihoods of workers, particularly in regions where labor is outsourced. In case, nearly 1,000 employees were laid off, and the platform 'Natasha' was discontinued. These events highlight the need for stringent regulations and accountability in AI development and deployment, ensuring that innovation does not come at the cost of ethical integrity. 'China Finally Sells Record-Breaking Plane': This 130-Foot Giant Can Dump 26,000 Pounds of Water in One Jaw-Dropping Drop The Broader Impact on the Tech Industry The collapse of serves as a wake-up call for the tech industry. It underscores the importance of due diligence and transparency in technological advancements. Investors and consumers must be vigilant and skeptical of grandiose AI claims, demanding evidence of authenticity and ethical practices. The tech community must foster an environment where innovation is not only celebrated but also accountable. As AI continues to evolve, the industry must prioritize ethical guidelines and transparency to maintain trust and credibility. The incident is a stark reminder that behind every technological innovation, there must be a commitment to honesty and integrity. As we navigate the future of AI, how can the industry ensure that advancements are both groundbreaking and ethical? Our author used artificial intelligence to enhance this article. Did you like it? 4.5/5 (30)
Telegraph
08-06-2025
- Business
- Telegraph
British AI start-up embroiled in sex assault claims after going bust
The acrimonious collapse of one of Britain's most feted AI start-ups came after it faced allegations that a senior executive sexually assaulted a former member of staff, The Telegraph can reveal. The alleged assault took place at a hotel in India in 2022 and was reported to the police at the time. A board member alerted management to the claims, which were also the subject of a public petition to remove the executive. The Telegraph is aware of the identities of the alleged perpetrator and victim but cannot name them for legal reasons. The alleged assault was said to have taken place when the executive was on holiday and not on company business. The individual has since left the company. However, The Telegraph understands the incident remains the subject of ongoing legal proceedings in India against the police for alleged failure to investigate the complaint properly. A police filing reported in Indian media at the time, which did not name Builder AI, alleged the victim was forced to take a pill at 3am after meeting the executive in a hotel bar, and was later seriously assaulted in a hotel room. The alleged victim told her sister and friends, who urged her to take the incident to the police. It is understood the executive denied any wrongdoing. Builder AI commissioned an internal investigation into the matter, led by the company's general counsel. Sachin Dev Duggal, Builder AI's ousted chief and founder, is said to have recused himself from the investigation and received the final report. There is no suggestion of wrongdoing by Mr Duggal. Despite the investigation, Manpreet Ratia, Builder AI's new chief executive, this weekend insisted the full board and wider executive team at Builder AI had not been informed of the matter. Builder AI said: 'The matter was first raised with the company by an individual board member, acting in their personal capacity. 'Based on internal emails reviewed to date, it appears that Sachin Duggal recused himself from involvement in the matter. 'The company has been informed that a report was submitted by the general counsel to Sachin Duggal and the individual board member, concluding that no further action was warranted. This report was not shared with the broader board or the executive leadership. 'For avoidance of doubt, the full board of directors and the executive team were not made aware of this matter at the time it arose.' The statement added the wider board was first made aware of the claims after being contacted by The Telegraph, and that the investigation had not been overseen or directed by the board. The sexual assault claims at Builder AI, which have not previously been reported, come days after the business filed for bankruptcy in the US amid reports that inflated sales precipitated its dramatic collapse. Builder AI's lenders pulled support from the business earlier in May after forecast sales failed to materialise and came in far below expectations. Predicted sales of $220m (£163m) came in at closer to $50m. The company has been served with subpoenas by US prosecutors in New York, who have asked for information on its financial reporting and accounting, The Telegraph understands. Mr Duggal, Builder AI's founder and 'chief wizard', launched the business in 2016 with the aim of making building an app as 'easy as ordering a pizza'. The company offered what it called 'human-assisted AI', using a chatbot called Natasha and human contractors to quickly and cheaply build apps. The company raised $250m from investors, including Microsoft and venture capital investors Jungle Ventures and Insight Partners, who bought into Mr Duggal's vision. However, Mr Duggal was ousted in February after the board found that the company's revenues for 2024 were far lower than had been forecast. The events ultimately led lenders to pull $40m from the company's accounts in May, according to a letter to investors, forcing the UK-headquartered start-up to file for bankruptcy in the US. Last week, the Financial Times reported Builder AI was suspected by former employees to have engaged in multiple methods to boost revenues, including alleged circular transactions and deals with resellers that took years to pay up. A source familiar with the company's finances, however, denied this, and insisted its revenues were always reported properly, transparent and said that business with partners was legitimate. Builder AI collapsed with liabilities of up to $100m, bankruptcy filings show. According to the note to investors, the company owed more than $88m to cloud providers, such as Amazon. The start-up had been widely hailed as UK AI champion. Mr Duggal was named an EY World Entrepreneur of the Year in 2024. Its failure, and the sexual assault allegations, threaten to cast a shadow over Britain's AI ambitions.
