Microsoft-backed AI startup Builder.AI files for bankruptcy, reports say – Mashable
A once-promising startup backed by Microsoft was supposed to simplify app development using human-assisted AI. Now, the company has filed for bankruptcy, according to Bloomberg.
Builder.ai pitched itself as an AI-powered way to simplify app development, using a combination of human engineers and AI. Clients chatted with the platform’s signature AI assistant, Natasha, and received an app based on the information they provided. Recently, a viral tweet accused the company of hiring 700 engineers in India to pose as Natasha in conversations with clients, but the company disputes this account, and a Financial Times report also casts doubt on the claim.
The Wall Street Journal reported in 2019 that Builder.ai had been accused of exaggerating its AI capabilities. As The Verge wrote at the time, the startup reportedly hoped to use the “hype around AI to attract customers and investment” to grow.
However, this isn’t the problem that precipitated Builder.AI’s downfall. The Financial Times reported recently that the company “overstated sales by as much as four times” and faced significant debt problems. According to Bloomberg, a lender seized $37 million from the company after discovering it generated just $50 million in revenue — 300 percent lower than its $220 million claim. The Financial Times reported that the company owes Amazon Web Services $88 million and Microsoft $30 million for cloud services.
Now, the company has filed for bankruptcy in the U.S., and similar filings may soon come in the UK and India, according to the Financial Times. In a statement on LinkedIn, Builder.ai wrote that it would be “entering into insolvency proceedings and will appoint an administrator to manage the company’s affairs.”
“Despite the tireless efforts of our current team and exploring every possible option, the business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position,” the LinkedIn post read.
As The Wall Street Journal’s 2019 report on Builder.ai points out, the AI boom raises an important question in the tech world: How do you assess how much a company uses AI, or how well they do it? In the worst-case scenarios, tech companies participate in a practice called “AI-washing,” when they purport that their tools use AI a far greater amount than they actually do. For example, when Coca‑Cola claimed their 2023 product Y3000 Zero Sugar was co-created with AI, the company reportedly provided no details on how AI was actually involved in the creation of the product, leaving many to speculate that the claim was designed to get more attention and interest from consumers.
As companies scramble to incorporate AI into their offerings — or at least, give the impression that they have done so — consumers may not share the tech sector’s unfettered enthusiasm for AI everything.
The Pew Research Center reports that 43 percent of respondents think AI will harm them, in comparison to just 24 percent who think the tech will benefit them. Moreover, “Public optimism is low regarding AI’s impact on work,” the Pew report reads. “While 73 [percent] of AI experts surveyed say AI will have a very or somewhat positive impact on how people do their jobs over the next 20 years, that share drops to 23 [percent] among U.S. adults.” According to another study, about half of all respondents said they’d rather speak to a real person over AI, in comparison with just 12 percent of respondents who said they preferred to speak with an AI chatbot. A quarter of respondents said it depended on the situation.
Correction: This story has been updated to more accurately reflect how Builder.ai marketed itself, and to attribute claims that the company had hired engineers in India to pose as AI. We also removed a quote from a LinkedIn post in which Linas Beliūnas of Zero Hash accused Builder.ai of using “Indian developers pretending to write code” for its AI tools.
A previous version of this article stated that Builder.AI’s bankruptcy filing included information that it owed Amazon Web Services $85 million. According to the Financial Times, the actual number is $88 million. In addition, the original article stated that the company filed for bankruptcy in the UK and India. While the company is expected to move forward with bankruptcy proceedings in these countries soon, according to the Financial Times and Sky News, this had not yet occurred when we originally published the article.
UPDATE: Jun. 13, 2025, 6:40 p.m. EDT This article has been updated with additional information and sources.
Topics Artificial Intelligence
Christianna Silva is a senior culture reporter covering social platforms and the creator economy, with a focus on the intersection of social media, politics, and the economic systems that govern us. Since joining Mashable in 2021, they have reported extensively on meme creators, content moderation, and the nature of online creation under capitalism.
Before joining Mashable, they worked as an editor at NPR and MTV News, a reporter at Teen Vogue and VICE News, and as a stablehand at a mini-horse farm. You can follow her on Bluesky @christiannaj.bsky.social and Instagram @christianna_j.
