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Fake it till you unicorn? Builder.ai’s Natasha was never AI – just 700 Indian coders behind the curtain

Builder.ai team
Photo credits: Builder.ai

If you haven’t seen your LinkedIn feed flooded with takes on Builder.ai’s collapse, you’re following the wrong people. The London-based AI unicorn, once lauded for making app development “as easy as ordering pizza,” has collapsed after being exposed for passing off human-written code as AI-generated, triggering global scrutiny over fake AI claims, financial irregularities, and a major data breach exposing 1.29 terabytes of client secrets

How did a startup backed by Microsoft, the Qatar Investment Authority, SoftBank’s DeepCore, and other major investors become Silicon Valley’s latest cautionary tale? Let’s break down the collapse.

The viral unmasking: 700 Indian coders playing “AI theatre”

The scandal erupted on May 31 when Ebern Finance founder Bernhard Engelbrecht posted a bombshell thread on X: “Builder.ai’s ‘AI’ was 700 humans in Delhi pretending to be bots. The only machine learning here was investors learning they’d been duped.” The post amassed 2.8 million views in 24 hours, with critics dubbing it “the Theranos of AI” and “WeWork 2.0.”

Builder.ai’s platform was marketed as being powered by an AI assistant called Natasha—promising rapid, automated app development. However, multiple investigations and whistleblower accounts confirmed that the company’s much-touted AI was, in reality, a thin layer over a large team of engineers based in India. These engineers manually built apps for clients while the company’s marketing suggested the process was automated by proprietary AI.

The money trail: How Builder.ai faked $220M in sales

Financial scrutiny in early 2025 revealed that Builder.ai had significantly inflated its reported revenue. While the company claimed a $220 million pipeline for 2024, internal audits showed actual revenues were closer to $55 million, with the majority coming from human-powered services.

Further investigation uncovered that Builder.ai engaged in “round-tripping” with Indian social media firm VerSe Innovation — exchanging large invoices for services that, according to sources familiar with the matter, did not actually occur. This practice artificially boosted both companies’ reported revenues and misled investors and lenders.

When lenders demanded proof of the $220 million pipeline, the internal audit exposed the discrepancy. The company’s cash burn reached $32 million per quarter, and projected losses for 2025 were $99 million. Reports also revealed that Builder.ai’s Mumbai office, presented as a major hub, was actually a WeWork sublet.

So, was any of Builder.ai real?

The evidence says no:

  • AI Claims: 0 verified NLP/ML patents; 100% human-coded output 
  • Financials: 300% revenue overstatement; $180M fake invoices 

    While Builder.ai did provide app development services, it operated as a traditional outsourcing firm rather than the AI innovator it claimed to be.

    Builder.ai’s collapse has triggered sector-wide panic. Industry experts warn that the case highlights the dangers of “AI washing”—overstating AI capabilities to attract investment. Many startups are now facing increased scrutiny over their actual technology and financial transparency.

    With U.S. prosecutors and regulators investigating, Builder.ai stands as a cautionary tale about the risks of hype-driven investment and the importance of due diligence in the tech sector.

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