The collapse of Builder.ai: how fake automation shook the tech market

Discover how Builder.ai deceived investors with fake automation and inflated revenues by up to 300%, resulting in insolvency.

The technology market has just been shaken by one of the biggest recent scandals involving automation and artificial intelligence .

British startup Builder.ai , once considered one of the most promising innovators in the sector, has filed for insolvency after alarming revelations: the company was actually operating with 700 engineers in India , while selling its solution as being based on automation and AI .

This emblematic case not only resulted in the bankruptcy of Builder.ai, but also exposed common weaknesses and risks in the business model of several technology startups.

Let’s dissect in depth:

• What happened to Builder.ai
• How the fake automation worked
• The financial scheme that helped inflate revenues
• Similar cases in the market
• Lessons for investors, consumers and the future of automation

What was Builder.ai and how did it operate?

Founded in 2015 , Builder.ai promised to revolutionize software development with a “no-code” platform , that is, one that would eliminate the need for human programmers to create applications.

To reinforce this proposal, the company introduced the virtual assistant “Natasha” , which supposedly automated the entire software creation process, allowing any client to assemble their application as if they were assembling Lego pieces.

However, the truth could not be more different…

The Real Natasha: 700 Engineers in India

Investigators and internal documents revealed that most of the software development was carried out by a team of 700 engineers based in India .

In other words:
✅ The client believed that the AI ​​Natasha was developing the app.
✅ In practice, the request was sent to the human team, who did the development manually .

This strategy raised the burning question:
Where does automation end and the exploitation of human labor disguised as AI begin?

The financial scheme: round-tripping with VerSe

In addition to the fake automation disguise, Builder.ai was also involved in a financial fraud scheme known as “round-tripping” with Indian company VerSe Innovation .

What is round-tripping?

Practice in which two companies:

• They issue invoices for similar amounts .
• There is no effective delivery of products or services.
• They create the appearance of revenue and artificial growth.

In the case of Builder.ai:

• Between 2021 and 2024 , approximately US$60 million in invoices were exchanged with VerSe.
• Revenues were overestimated by up to 300% .
• The company managed to attract new investments , including from Microsoft .

The fall: insolvency and investigations

The scheme began to unravel in 2023 , when lender Viola Credit froze $37 million from Builder.ai after the company failed to pay debts.

By 2025 , the situation has become unsustainable:

• U.S. federal investigators and prosecutors have subpoenaed the company for financial documents, customer lists and accounting policies .
• The company filed for insolvency .
• Only US$5 million remained , insufficient to maintain operations.

The case became a global reference on the risks of false automation.

Builder.ai Scandal Timeline

Other similar cases

Builder.ai wasn’t the first, nor will it be the last, to adopt strategies that simulate full automation but hide an army of human workers .

📌 Amazon — Just Walk Out

• System promoted as fully automated, eliminating cashiers in stores.
• It was discovered that more than 1,000 employees in India were reviewing videos of purchases to fix system flaws.
• The project was closed in 2024 .

📌 QuickBooks

• Online accounting system, promoted as automated.
• Employees in the Philippines performed accounting tasks manually, while customers believed in automation.

Impacts on the technology market

Builder.ai collapse shakes confidence:

• Investors realize they can be fooled by inflated metrics.
• Consumers understand that not all AI is actually intelligent.
• Startups face increased pressure for transparency and rigorous audits .

Where are we with automation?

The Builder.ai case raises important questions:

• Is the industry moving too fast, promising more than it can deliver?
• How many other companies hide human processes under the guise of artificial intelligence?
• How can the market protect itself from these fallacies?

Builder.ai’s Promise vs. Reality

How can investors avoid similar pitfalls?

• ✅ Request independent technical and financial audits .
• ✅ Ask for concrete proof of automation — real demos .
• ✅ Observe employee numbers , especially in outsourcing.
• ✅ Beware of very fast growth schemes with little technical basis.

10 Important Questions About the Builder.ai Case

1. What is Builder.ai?

A British startup that promised an automated no-code platform for creating apps.

2. Was Builder.ai’s automation real?

No. Most of the work was done by 700 human engineers.

3. What is round-tripping?

Exchange of invoices between companies to artificially inflate revenue.

4. What was the inflated revenue value?

Builder.ai overestimated its sales by up to 300% .

5. Which companies were involved in the scheme?

Builder.ai e VerSe Innovation.

6. Does VerSe deny the accusations?

Yes, but documents indicate reciprocal exchanges of approximately US$60 million .

7. What happened to the investments?

Over $445 million was raised; most of it was lost.

8. How did the situation affect employees?

Most were laid off after the insolvency.

9. Is the Builder.ai case unique?

No. Similar cases have occurred with Amazon and QuickBooks.

10. What do we learn from this case?

That it is essential to demand transparency, audits and real proof of automation.

And now?

Builder.ai has become a global symbol of the risk that too much tech hype can cause.

Companies, investors and consumers need to learn from this episode and start demanding more ethics, clarity and responsibility .

If AI is the promise, then let it be real — and not just a human facade in disguise .

Until the next article! 🚀

Cirino | Dev’s House
https://casado.dev

Tags: ai | artificial intelligence | automation | builderai | digital transformation | false automation | future of technology | jobs | labor market | tech | technology | trends