I’ve been following the story of Builder.ai for a while now. It was one of those startups that looked like it had cracked the code, literally. Build apps without knowing how to code? Genius. Big investors lined up: Microsoft, Qatar Investment Authority, and Insight Partners. The company raised over $450 million and was valued at $1.5 billion. But now? It’s planning to file for bankruptcy. And it’s not just a regular collapse — it’s the kind that leaves smoke trails, subpoenas, and serious questions in its wake.
So what happened?
Well, according to documents reviewed by Bloomberg and a bunch of people who seem to know what went down, Builder.ai might’ve been faking business deals with an Indian social media company called VerSe Innovation. If the name sounds familiar, they own Dailyhunt and Josh, the app that tried to step in after TikTok got banned in India.
The alleged trick? Something called round-tripping. Imagine Company A sends money to Company B, and Company B sends it back, all under the pretense of “buying services.” It looks like revenue on paper, but in reality? Nothing of substance is exchanged.
Between 2021 and 2024, Builder.ai and VerSe reportedly sent each other invoices worth similar amounts, close to $60 million. And in many cases, insiders claim no real services were provided. The goal? To inflate Builder.ai’s sales numbers. Sounds shady, right?
But here’s the twist: VerSe is strongly denying all of it. Co-founder Umang Bedi said the claims are “absolutely baseless and false.” He added that reputable external firms had verified the transactions, and they didn’t just send and receive invoices for fun.
VerSe is no small fry either. They’ve raised over $800 million, have Google and Goldman Sachs as early backers, and are eyeing an IPO. So naturally, they’re pushing back hard on any narrative that might dent their image. Deloitte, their auditor, did sign off on their financials, although they flagged weak controls in areas like advertising revenue and supplier relationships.
Still, if I’m being honest, the relationship between the two companies looks…cozy. Duggal (Builder.ai’s founder) and Bedi (VerSe’s co-founder) have taken photos together, posted on social media, and even appeared at events like London Tech Week. Duggal even called Bedi part of the “extended Builder.ai family.”
But Bedi, in his defense, says they aren’t close. Just business contacts. He invested a modest $10,000 in Builder.ai years ago and claims they’ve only met a handful of times. That photo at 10 Downing Street? Just part of a bigger group of tech folks, he says.
Builder.ai isn’t commenting. Probably lawyered up at this point. They’ve already admitted there were “discrepancies” in past sales numbers, but they haven’t said how deep it goes. US prosecutors have subpoenaed their financials and asked for a customer list, which tells you this isn’t just a minor hiccup.
To make things worse, a major creditor reportedly seized most of Builder.ai’s cash after discovering the company had exaggerated its projected 2024 sales by a staggering 300%. That move pushed the startup to the edge , and it looks like it’s now about to fall off the cliff.
As I follow this story, I can’t help but think about how the hype around AI startups is starting to feel like the dot-com bubble all over again. Big valuations, shiny promises, fancy booths at global tech summits — but behind the scenes? Sometimes it’s smoke and mirrors.
Here’s my question to you:
Would you trust your money with a startup that looks great on paper but has shaky financials?
And more importantly, in this new AI gold rush, how do we separate the real innovators from the ones gaming the system?
Let me know what you think. This story’s still unfolding, and it’s probably not the last twist we’ll see.
