Microsoft-backed AI software company Builder.ai has confirmed it is entering insolvency proceedings following months of internal turmoil and financial instability. Once hailed as a pioneer for simplifying app development using artificial intelligence, the company—officially known as Engineer.ai Corporation, has now appointed an administrator to take over its operations and manage the process moving forward.
A company spokesperson acknowledged that despite persistent efforts from the team and exhaustive attempts to stabilize the business, Builder.ai could not recover from “historic challenges and past decisions” that had left it financially strained. The spokesperson emphasized that the company’s immediate focus is to support its employees, customers, and partners while working with the administrators to assess any viable paths for parts of the business.
Leadership Instability and Financial Red Flags
The path to insolvency has been paved with a series of internal crises. Earlier in 2024, Builder.ai was forced to slash its projected revenue for the second half of the year by 25%, a move that signaled brewing financial difficulties. In February, the company appointed a new CEO, Manpreet Ratia, as part of a leadership overhaul aimed at steadying the ship.
However, this change did little to reverse its trajectory. The company later hired auditors to conduct a deep review of its books, suggesting further concern behind the scenes. Allegations from former employees, as reported by Bloomberg, claimed Builder.ai had inflated its sales numbers by more than 20% on multiple occasions—raising questions about the reliability of its financial reporting.
A Promising AI Story Undone by Reality
Builder.ai first made waves by pitching an AI-driven platform that could automate app and website development. The promise of rapid, low-code software creation attracted over $450 million in venture funding, including a high-profile investment from Microsoft. But skepticism had surrounded the platform for years. Back when the company operated under the name Engineer.ai, reports by The Wall Street Journal revealed that its so-called “automated” platform was in fact heavily reliant on manual labor from human engineers.
Although the firm later rebranded and sought to clean up its image, it struggled to regain trust or deliver the level of scalable automation it had advertised. Now, amid growing investor scrutiny and operational breakdowns, Builder.ai’s insolvency marks a sobering moment for the AI startup ecosystem.
