AI software firm Builder.ai, backed by tech giant Microsoft, has announced that it is entering insolvency proceedings, as confirmed by a company spokesperson to TechCrunch. The company, which had raised over $450 million in funding, gained notoriety for its AI-driven platform designed to streamline the creation of apps and websites.
The company, also known as Engineer.ai Corporation, has decided to appoint an administrator to oversee the management of its affairs. In a statement, Builder.ai acknowledged the relentless efforts of its team and the exploration of all possible solutions, but admitted that it was unable to overcome historical challenges and past decisions that significantly impacted its financial health. The company's primary focus now is to support its employees, customers, and partners during this challenging period. They will collaborate with the appointed administrators to ensure an orderly process and to investigate all viable options for the business segments that are feasible.
Over the past few months, Builder.ai has experienced significant leadership changes and financial turmoil. In March, it was reported that the company had reduced its projected revenue by 25% for the latter half of 2024. In February, Manpreet Ratia was appointed as the new CEO of the company. The hiring of auditors to review the company's financials suggested that there might have been underlying issues not apparent in public view. Bloomberg reported that former employees accused the company of inflating sales figures by more than 20% on several occasions.
Before the rebranding from Engineer.ai to Builder.ai, the company was involved in a minor scandal. Engineer.ai had claimed to have developed a largely automated app development platform, but it was revealed that the platform heavily depended on human engineers, as reported by The Wall Street Journal. This revelation and the subsequent financial and leadership issues have culminated in the current insolvency proceedings, marking a significant downturn for what was once a promising AI unicorn.