London, UK – May 31, 2025 – Builder.ai, a UK-based software development platform renowned for its AI-driven solutions, is under intense scrutiny following allegations of artificially inflating its sales figures through “round-tripping” transactions with Indian firm VerSe Innovation. This practice, involving reciprocal billing to create the illusion of revenue, has raised significant concerns about the company’s financial integrity and operational transparency.
Allegations of Financial Misconduct
The controversy centers on claims that Builder.ai engaged in round-tripping transactions with VerSe Innovation, a prominent Indian digital media company. These transactions allegedly involved both companies invoicing each other for services that were either non-existent or grossly overstated, thereby inflating their respective revenue figures. Such practices, if proven, could constitute serious violations of financial reporting standards and corporate governance norms.
An internal investigation commissioned by Builder.ai’s board uncovered discrepancies in revenue recognition, particularly concerning uncollected sales and questionable dealings with Middle Eastern resellers. The probe suggested a deliberate effort to overstate revenues, leading to a significant restatement of the company’s financials. Provisional accounts revealed that 2024 revenues were revised down from $220 million to $55 million, and 2023 revenues dropped from $180 million to $45 million .
Leadership Turmoil Amidst Crisis
In the wake of these revelations, Builder.ai’s founder, Sachin Dev Duggal, stepped down as CEO earlier this year, though he retained a position on the board with the title of “chief wizard.” He was succeeded by Manpreet Ratia, a seasoned executive with experience at Amazon and Flipkart . Despite the leadership change, the company continued to grapple with financial instability, culminating in insolvency proceedings after lenders declared a default on a $50 million loan .
Investor Confidence Shaken
Builder.ai had previously attracted significant investment from major players, including Microsoft, SoftBank, and the Qatar Investment Authority, amassing over $500 million in funding. The company’s valuation soared to over $1 billion, positioning it as a leading innovator in the AI-driven software development space . However, the recent financial irregularities have cast a shadow over its credibility, prompting investors and stakeholders to reassess their involvement.
Data Security Concerns
Compounding Builder.ai’s challenges, a cybersecurity researcher discovered that the company had inadvertently exposed over 1.2 terabytes of sensitive data, including more than 3 million records. The unprotected database contained customer cost proposals, NDA agreements, invoices, and other confidential documents . This breach underscores the importance of robust cybersecurity measures, especially for companies operating in the tech sector.
Legal Entanglements and Denials
Further complicating the situation, Builder.ai’s co-founders have been implicated in separate legal cases. Sachin Dev Duggal has been named as a suspect in an alleged money laundering case related to transactions with the now-defunct electronics giant Videocon. Another co-founder, Saurabh Dhoot, faces allegations connected to loan fraud. Both individuals have denied any wrongdoing, asserting that the investigations pertain to their previous ventures and not to Builder.ai .
Industry Implications
The unfolding events at Builder.ai serve as a cautionary tale for the tech industry, highlighting the critical need for transparency, ethical financial practices, and stringent cybersecurity protocols. As the company navigates its insolvency proceedings, stakeholders and observers alike will be watching closely to see how it addresses these multifaceted challenges.
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