Builder.ai, the once-hyped no-code startup valued at $1.3B, has collapsed after mass layoffs and investor exits, exposing the gap between AI hype and real-world delivery.
Investor Exodus Triggers Shutdown
No-code startup Builder.ai has shut down operations following mass layoffs and investor withdrawals that triggered a liquidity crisis. The London-based startup, which promised to make app development “as easy as ordering pizza,” laid off approximately 80% of its workforce in early May and ceased client services after failing to deliver on technology promises that attracted over $450 million in funding.
Sources close to the company said Builder.ai faced mounting pressure from investors including SoftBank, Insight Partners, and Qatar Investment Authority after missing key performance metrics and client deadlines throughout 2024 and early 2025.
The company’s financial position deteriorated rapidly when several major investors declined to participate in further funding rounds, according to two people familiar with internal discussions.
“The AI promises never materialized into the product they were selling,” said a former senior employee. “We were essentially using offshore developers and templates while marketing it as revolutionary AI technology.”
Client Complaints Mount
Clients across multiple markets report incomplete projects and unresponsive support. Builder.ai’s customer portal has been down since mid-May, and dashboards return error messages.
A Dubai-based executive said his company paid $150,000 for an app that was never completed despite six months of promised development.
“They kept saying their AI assistant ‘Natasha’ would handle everything automatically,” the executive said. “In reality, we got a buggy prototype and then complete radio silence.”
Multiple clients are now exploring legal action to recover payments and access project assets.
Technology Claims Under Investigation
Internal documents reviewed by Digital Boom suggest Builder.ai’s AI capabilities were overstated in both marketing materials and investor pitches. The platform relied heavily on human developers in India and templated components rather than advanced AI systems.
Sachin Dev Duggal, who founded the company in 2016, did not respond to requests for comment. Builder.ai’s London office appeared largely vacant when visited on Friday.
Enterprise Deals Fall Through
Builder.ai had attempted to pivot toward enterprise clients in 2024, announcing pilot programs with HSBC and Etisalat. However, neither pilot converted into commercial contracts. Both companies declined to comment when contacted by Digital Boom.
Former employees said internal revenue projections were overly optimistic and not backed by signed deals, adding to investor concerns.
Legal Complications Emerge
Vendors and contractors across India, the UAE, and the UK have filed lawsuits seeking payment for services rendered. Outstanding invoices total several million dollars, according to court filings in London and Dubai.
Clifford Chance is representing unpaid vendors in the UK, while Baker McKenzie is handling similar cases in the UAE.
Industry Impact
The collapse has sent ripples through the European tech ecosystem. Builder.ai was often cited as a leader in AI-powered business automation and no-code development.
“This is a cautionary tale about the gap between AI marketing promises and actual technological capabilities,” said Sarah Chen, a technology analyst at TechInsight Partners.
The failure highlights risks in the no-code space, where high valuations often outpace technical depth.
What’s Next
Builder.ai’s website remains online with a placeholder page, but all customer-facing services are offline. The company’s London lease expires in September, according to public records.
Clients are advised to document all project communications and explore legal options for asset recovery. Former employees say severance packages were minimal, and equity grants are now likely worthless.
The collapse marks the largest European startup failure by valuation since Wirecard in 2020.
Digital Boom will continue monitoring this story as legal proceedings unfold and asset sales progress.
