Microsoft-backed Builder.ai’s AI was 700 Indian coders writing code the old-fashioned way

Microsoft-backed Builder.ai’s AI was 700 Indian coders writing code the old-fashioned way Tezzbuzz | 04/06/2025 05:24:33

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Builder.ai, once celebrated as a pioneering AI startup with the endorsement of Microsoft, has recently plunged into insolvency.

The platform was marketed as being powered by an AI assistant named “Natasha,” which was said to be capable of assembling software applications with the simplicity and precision of Lego bricks. However, investigations have revealed that the operations were far from automated. Instead, customer requests were manually processed by a team of developers, a fact that was concealed from clients and investors. This discrepancy between the company’s claims and its actual operations has been a major factor in its downfall.

Ebern Finance founder Bernhard Engelbrecht, in a widely circulated post on X, highlighted the extent of the deception: “Customer requests were sent to the Indian office, where 700 Indians wrote code instead of AI,” he stated.

Engelbrecht further criticized the quality of the end products, describing them as “buggy, dysfunctional, and difficult to maintain.” He concluded with a damning assessment: “Everything was like real artificial intelligence — except that none of it was.”

Microsoft-backed Builder.ai's AI was 700 Indian coders writing code the old-fashioned way — Microsoft-backed Builder.ai’s AI was 700 Indian coders writing code the old-fashioned wayOfficial website

The financial collapse of Builder.ai began when Viola Credit, a lender that had extended a $50 million loan to the startup in 2023, seized $37 million after the company defaulted on its payments. This effectively crippled Builder.ai’s ability to continue operations or pay its employees. Compounding the financial woes, additional funds held in India remain frozen due to regulatory restrictions, as reported by Bloomberg. These financial constraints have forced Builder.ai into formal insolvency proceedings in the UK, where a court-appointed administrator is now tasked with assessing how to recover assets or salvage parts of the business.

In a statement on LinkedIn, Builder.ai acknowledged its “early missteps” and admitted that these had pushed the company “beyond recovery.” The company has declined to comment further on pending legal matters, including a subpoena, leaving many questions unanswered about the future of its operations and the fate of its employees. The insolvency proceedings are being closely watched by industry observers, as they may set precedents for how similar cases are handled in the future.