Builder.ai Collapses into Insolvency - Tech Unicorn's Dramatic Downfall

Builder.ai Collapses into Insolvency: Tech Unicorn's Dramatic Downfall

London's AI startup giant enters administration as financial irregularities come to light in the competitive low-code development market

Builder.ai, once hailed as one of the UK's most promising tech unicorns, announced today (May 20, 2025) that it is entering insolvency proceedings and will appoint an administrator to oversee the company's affairs. The London-based artificial intelligence startup, which specialized in using AI to develop customized applications, had secured impressive backing from industry titans including Microsoft and the Qatar Investment Authority.

Founded in 2016 by Sachin Dev Duggal (who styled himself as "chief wizard"), Builder.ai had accumulated more than $450 million in funding throughout its lifespan. The company positioned itself as a revolutionary force in the low-code/no-code application development market, offering an "AI-wizard" approach that promised to democratize bespoke app development for non-technical teams.

The collapse follows months of troubling developments. In March 2025, Bloomberg reported that Builder.ai had significantly lowered sales figures previously provided to investors. The company subsequently hired auditors to examine its accounts from the previous two years. Founder Duggal stepped down as CEO in February 2025 and later resigned as a director from the company's UK entity, though reports indicate he remained on the group's board.

In today's announcement, Builder.ai attributed its failure to an inability to recover from "past decisions," marking a stunning downfall for what was once considered one of the UK's best-funded technology startups.

Key Takeaways

• Financial governance issues: Builder.ai had been operating without a CFO since July 2023, relied on an auditor with long-standing links to its founder (raising conflict of interest concerns), and had subsidiaries that rapidly cycled through several small audit firms.

• Leadership turmoil: Founder Sachin Dev Duggal stepped down amid legal scrutiny in India and mounting governance questions, disrupting board continuity at a critical time.

• Operational challenges: The company suffered from overreliance on unvetted reseller channels in the Middle East, leading to premature revenue booking, while its burn rate outpaced sustainable growth.

• Market positioning struggles: As major vendors increasingly infused AI into their low-code platforms, Builder.ai's standalone value proposition lost its distinctive appeal in the competitive landscape.

Deep Analysis

The collapse of Builder.ai represents more than just the failure of a single company—it highlights broader trends and challenges within the rapidly evolving low-code/no-code development market.

The global low-code development platform market has transformed from early hype to mainstream adoption, valued at USD 28.75 billion in 2024 and projected to reach USD 37.39 billion in 2025. With forecasts suggesting growth to USD 264.40 billion by 2032 (representing a remarkable 32.2% CAGR), the potential remains enormous. Similarly, the AI code tools segment was valued at US $6.7 billion in 2024 and is expected to grow to US $25.7 billion by 2030 at a 25.2% CAGR.

Builder.ai attempted to carve out a unique position in this landscape with its end-to-end AI assembly line approach, combining development, QA, DevOps, and support under one roof. However, the company ultimately failed to compete effectively against well-established players like Microsoft Power Platform (with its 56 million monthly active users and 27% YoY growth), Mendix (a Gartner "Leader" for eight consecutive years), OutSystems, and Appian.

These competitors delivered stronger governance, proven ROI, and lower switching risks—areas where Builder.ai struggled. Microsoft Power Apps, for instance, boasts a 206% ROI and 50% faster development times according to third-party studies, while benefiting from massive network effects and tight Office 365 integration.

Builder.ai's collapse can be attributed to several critical factors:

1. Eroded investor trust: Financial restatements and governance lapses alarmed backers who had collectively invested US $450 million.

2. Loss of differentiation: As AI capabilities became standard features in established low-code platforms, Builder.ai's unique selling proposition diminished.

3. Broader funding pullback: A general slowdown in tech capital investment reduced runway for companies without a clear path to profitability.

The implications for the wider ecosystem are significant. Venture capitalists will likely emphasize audit quality, transparent revenue recognition, and experienced leadership teams in future investments. Market consolidation through M&A among mid-tier platforms is expected, alongside deeper alliances between software vendors and systems integrators. Innovation will increasingly focus on vertical-specific accelerators, AI-driven lifecycle management, and low-code embedded analytics.

Did You Know?

• By 2025, it's estimated that 70% of new business applications will be built on low-code/no-code platforms, highlighting the strategic importance of this sector.

• Builder.ai's subsidiaries worked with a Singaporean audit firm that had previously audited cryptocurrency hedge fund Three Arrows Capital before its collapse—an early warning sign of potential governance issues.

• The company had claimed it engaged a "Big 4 internal audit firm and a Big 4 statutory group auditor for consolidated oversight" as part of efforts to improve its financial governance, but these measures ultimately proved insufficient.

• In the competitive low-code/no-code landscape, execution discipline, trustworthy finances, and clear differentiation have proven as critical as technological innovation for long-term success.

• Builder.ai's 2023 revenues were revised down to US $140 million, and its 2024 half-year forecast was cut by 25% after reseller deals underdelivered, signaling fundamental issues with its business model.

Builder.ai's dramatic rise and fall serves as a cautionary tale for the tech industry, particularly for AI startups operating in increasingly competitive and maturing markets where financial transparency and governance can be as important as technological innovation.