Builder.ai, the tech unicorn backed by Singapore venture capital investor Jungle Ventures and Qatar Investment Authority (QIA), reportedly collapsed after showing signs of potentially fabricated sales and a 75% reduction in revenue estimate.
According to a Financial Times report, provisional accounts seen by lenders reveal a dramatic reduction in revenue estimates, with 2024 sales slashed from $220 million to about $55 million and 2023 total sales figures restated from $180 million to around $45 million.
These prior revenue figures were previously submitted to the board under the leadership of Sachin Dev Duggal. The discrepancies were flagged during a financial review, prompting concerns about the integrity of Builder.ai’s reporting.
According to the report, which quoted people familiar with the matter, the previously booked sales remained uncollected for very long periods.
Duggal stepped down as CEO earlier this year. Chief Revenue Officer Varghese Cherian also resigned around the same time.
The company informed employees earlier this week that it would commence insolvency proceedings after its lenders called a default.
During a company-wide call on May 20, the company’s new CEO, Manpreet Ratia, reportedly told employees that Builder.ai’s senior lenders had placed the company into default and that the company’s cash reserves were seized.
“Despite the tireless efforts of our current team and exploring every possible option, the business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position,” the company said in a LinkedIn post.
The decision to enter insolvency proceedings comes about two years after Builder.ai announced raising $250 million in its Series D funding round led by QIA.
The Series D round included participation from existing and new investors, including Iconiq Capital, Jungle Ventures, and Insight Partners.
It also raised $100 million in its Series C round anchored by Insight Partners and backed by existing investor Jungle Ventures, International Finance Corporation, and Jeffrey Katzenberg’s WndrCo.
The company’s blue-chip backers, which include Microsoft and QIA, collectively poured more than $500 million into the company that claims to help companies go online with its AI-powered low-code app development platform.
The company had secured a $50 million debt line in October but its cash reserves had dwindled to about $7 million when Ratia stepped in and joined as CEO in March.
The company has come under scrutiny from corporate governance experts over its accounting practices, including the use of an auditor with long-standing ties to its founder.
Builder.ai started life in the north Indian city of Gurugram before shifting its headquarters to India.
