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Sustainability Times
11-06-2025
- Business
- Sustainability Times
Shocking Revelation in Tech Industry: A 1.5 Billion Dollar 'Fake AI' Exposed With 700 Real-Time Coders Operating From India
IN A NUTSHELL 🔥 , a British startup, was exposed for using 700 engineers in India instead of advanced AI technology to code applications. , a British startup, was exposed for using 700 engineers in India instead of advanced technology to code applications. 💰 The company raised over $480 million from investors like Microsoft, only to inflate revenue projections by 300% and face financial turmoil. ⚖️ Ongoing investigations include a UK insolvency process and a US federal probe, with founder Sachin Dev Duggal facing money laundering allegations in India. 🌐 The scandal highlights the widespread issue of 'AI washing' in the tech industry, where human labor is misrepresented as AI work. In the fast-paced world of technology, the allure of artificial intelligence (AI) often promises to streamline processes and reduce human intervention. However, the story of a British startup once valued at $1.5 billion, reveals a darker side to this narrative. The company, which claimed to revolutionize app development through AI, was found to rely heavily on manual coding by 700 engineers in India. As the facade crumbled, it became a cautionary tale of how technological advancements can sometimes mask traditional labor practices. This incident underscores the importance of transparency and ethical practices in the tech industry. The Illusion of Revolutionary AI led by founder Sachin Dev Duggal, captivated investors with the promise of making app creation as easy as ordering a pizza. The centerpiece of this promise was a virtual assistant named 'Natasha,' heralded as a groundbreaking AI capable of developing custom applications with minimal coding. However, beneath this innovative veneer, the reality was starkly different. Reports revealed that the so-called AI relied on the relentless work of 700 developers in India, who manually coded applications based on client requests. This labor-intensive process was cleverly hidden behind the guise of sophisticated AI technology, misleading investors and clients alike. With financial backing from notable entities like Microsoft and the Qatar Investment Authority, successfully raised over $480 million. Yet, the company's house of cards began to tumble when the truth emerged. The reliance on human coders instead of advanced AI technologies exposed the firm to scrutiny and led to an investigation into its operational practices. This revelation not only shocked the tech community but also raised questions about the legitimacy of AI claims in the industry. 'Nasa Confirms the Unthinkable': China's Giant Water Diversion Project Will Slow Earth's Rotation and Disrupt Global Timekeeping Financial Fallout and Investigations The unraveling of operations had severe financial repercussions. Viola Credit, an investor, withdrew $37 million from the company after discovering that projected revenues had been inflated by 300%. The startup's forecasted revenue of $220 million was a gross exaggeration, with audits revealing actual figures closer to $50 million. This misrepresentation led to a liquidity crisis, leaving the company with only $5 million in accessible funds, which were subsequently frozen due to legal restrictions. The financial turmoil prompted Manpreet Ratia, appointed as president after the resignation of his predecessor, to file for bankruptcy. As the company navigates insolvency proceedings in the UK, US prosecutors have launched a federal investigation, demanding the company's financial records and client lists. Additionally, founder Sachin Dev Duggal faces allegations of money laundering in India, further complicating the legal landscape surrounding Earth Is Slowing Down as China's Gigantic Water Project Forces a Planetary Shift Confirmed by NASA's Latest Alarming Report A Widespread Phenomenon The scandal is not an isolated incident. The practice of 'AI washing,' where companies attribute human work to AI, is becoming alarmingly common. Amazon faced a similar controversy with its 'Just Walk Out' technology, which involved over 1,000 human operators in India. Additionally, several accounting services, advertised as automated, were found to employ Filipino workers for manual tasks. This deceptive practice raises ethical concerns about the transparency and integrity of AI claims in the tech industry. The repercussions of such practices extend beyond financial deceit. They affect the livelihoods of workers, particularly in regions where labor is outsourced. In case, nearly 1,000 employees were laid off, and the platform 'Natasha' was discontinued. These events highlight the need for stringent regulations and accountability in AI development and deployment, ensuring that innovation does not come at the cost of ethical integrity. 'China Finally Sells Record-Breaking Plane': This 130-Foot Giant Can Dump 26,000 Pounds of Water in One Jaw-Dropping Drop The Broader Impact on the Tech Industry The collapse of serves as a wake-up call for the tech industry. It underscores the importance of due diligence and transparency in technological advancements. Investors and consumers must be vigilant and skeptical of grandiose AI claims, demanding evidence of authenticity and ethical practices. The tech community must foster an environment where innovation is not only celebrated but also accountable. As AI continues to evolve, the industry must prioritize ethical guidelines and transparency to maintain trust and credibility. The incident is a stark reminder that behind every technological innovation, there must be a commitment to honesty and integrity. As we navigate the future of AI, how can the industry ensure that advancements are both groundbreaking and ethical? 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Telegraph
08-06-2025
- Business
- Telegraph
British AI start-up embroiled in sex assault claims after going bust
The acrimonious collapse of one of Britain's most feted AI start-ups came after it faced allegations that a senior executive sexually assaulted a former member of staff, The Telegraph can reveal. The alleged assault took place at a hotel in India in 2022 and was reported to the police at the time. A board member alerted management to the claims, which were also the subject of a public petition to remove the executive. The Telegraph is aware of the identities of the alleged perpetrator and victim but cannot name them for legal reasons. The alleged assault was said to have taken place when the executive was on holiday and not on company business. The individual has since left the company. However, The Telegraph understands the incident remains the subject of ongoing legal proceedings in India against the police for alleged failure to investigate the complaint properly. A police filing reported in Indian media at the time, which did not name Builder AI, alleged the victim was forced to take a pill at 3am after meeting the executive in a hotel bar, and was later seriously assaulted in a hotel room. The alleged victim told her sister and friends, who urged her to take the incident to the police. It is understood the executive denied any wrongdoing. Builder AI commissioned an internal investigation into the matter, led by the company's general counsel. Sachin Dev Duggal, Builder AI's ousted chief and founder, is said to have recused himself from the investigation and received the final report. There is no suggestion of wrongdoing by Mr Duggal. Despite the investigation, Manpreet Ratia, Builder AI's new chief executive, this weekend insisted the full board and wider executive team at Builder AI had not been informed of the matter. Builder AI said: 'The matter was first raised with the company by an individual board member, acting in their personal capacity. 'Based on internal emails reviewed to date, it appears that Sachin Duggal recused himself from involvement in the matter. 'The company has been informed that a report was submitted by the general counsel to Sachin Duggal and the individual board member, concluding that no further action was warranted. This report was not shared with the broader board or the executive leadership. 'For avoidance of doubt, the full board of directors and the executive team were not made aware of this matter at the time it arose.' The statement added the wider board was first made aware of the claims after being contacted by The Telegraph, and that the investigation had not been overseen or directed by the board. The sexual assault claims at Builder AI, which have not previously been reported, come days after the business filed for bankruptcy in the US amid reports that inflated sales precipitated its dramatic collapse. Builder AI's lenders pulled support from the business earlier in May after forecast sales failed to materialise and came in far below expectations. Predicted sales of $220m (£163m) came in at closer to $50m. The company has been served with subpoenas by US prosecutors in New York, who have asked for information on its financial reporting and accounting, The Telegraph understands. Mr Duggal, Builder AI's founder and 'chief wizard', launched the business in 2016 with the aim of making building an app as 'easy as ordering a pizza'. The company offered what it called 'human-assisted AI', using a chatbot called Natasha and human contractors to quickly and cheaply build apps. The company raised $250m from investors, including Microsoft and venture capital investors Jungle Ventures and Insight Partners, who bought into Mr Duggal's vision. However, Mr Duggal was ousted in February after the board found that the company's revenues for 2024 were far lower than had been forecast. The events ultimately led lenders to pull $40m from the company's accounts in May, according to a letter to investors, forcing the UK-headquartered start-up to file for bankruptcy in the US. Last week, the Financial Times reported Builder AI was suspected by former employees to have engaged in multiple methods to boost revenues, including alleged circular transactions and deals with resellers that took years to pay up. A source familiar with the company's finances, however, denied this, and insisted its revenues were always reported properly, transparent and said that business with partners was legitimate. Builder AI collapsed with liabilities of up to $100m, bankruptcy filings show. According to the note to investors, the company owed more than $88m to cloud providers, such as Amazon. The start-up had been widely hailed as UK AI champion. Mr Duggal was named an EY World Entrepreneur of the Year in 2024. Its failure, and the sexual assault allegations, threaten to cast a shadow over Britain's AI ambitions.
Sky News
06-06-2025
- Business
- Sky News
Administrators lined up for UK arm of Microsoft-backed Builder.ai
Why you can trust Sky News Administrators are on standby to handle the collapse of the UK arm of a Microsoft-backed start-up which has filed for bankruptcy protection in the US. Sky News has learnt that Alvarez & Marsal (A&M) has been lined up to oversee the insolvency of UK entities. News of the impending appointment comes days after which was founded by Sachin Dev Duggal, collapsed in the US. Mr Duggal stepped down earlier this year. had raised hundreds of millions of dollars from investors, including a Qatari sovereign wealth fund, helping it to achieve a 'unicorn' valuation of more than $1bn. The company said it used artificial intelligence to make the process of building an app "as easy as ordering pizza". In recent weeks, however, media outlets including the Financial Times have alleged that the company used potentially bogus sales figures to attract investment. The newspaper also reported that Mr Duggal had sounded out potential backers to buy the business out of insolvency proceedings. It was unclear on Friday whether any meaningful assets remained within UK corporate entities.
Yahoo
02-06-2025
- Business
- Yahoo
The controversial collapse of a £1bn British AI dream
'It is not the critic who counts,' Sachin Dev Duggal posted on Instagram days after he was pushed out as chief executive of Builder AI. 'The credit belongs to the man who is actually in the arena … who, if he fails, at least fails while daring greatly.' Just weeks after Duggal posted this famous Teddy Roosevelt quote, Builder AI would indeed fail – and in spectacular fashion. On May 20, the London start-up confirmed that it would be appointing administrators with the loss of about 1,000 jobs. The collapse came despite Duggal, a colourful technology entrepreneur who went by the title of 'chief wizard', raising more than $450m (£334m) in funding from investors including Microsoft, Qatar's sovereign wealth fund, and venture capital investors such as Insight Partners. Builder AI had claimed to use 'human-assisted AI', including a bot called 'Natasha', to quickly and cost-effectively build apps for customers, including the BBC. Duggal, who has said he started building PCs at home at the age of 14, said the company would make building an app as easy as ordering a pizza. This vision helped Builder AI catapult to a valuation of $1.5bn, making it one of Britain's rare 'unicorns' – a private tech company worth more than a billion. Not only that, it was also operating in the field of AI, a technology Sir Keir Starmer has promised will 'deliver a decade of national renewal'. Now, administration appears all but certain, although advisers have yet to be formally appointed. Manpreet Ratia, who was parachuted in by investors to try and save the business, told staff earlier in May that he had been left running the company with 'zero dollars', according to the Financial Times. In a letter to investors seen by The Telegraph, Ratia blamed the sudden collapse on the 'unexpected and irreversible action' of the company's senior lenders who 'swept over $40m in cash from our accounts, and restricted all access to funds, effectively shutting down our ability to operate'. According to Bloomberg, the company's lenders pulled funds after Builder AI's promised sales figures came in far below expectations. Before his exit the 42-year-old Duggal gave lenders a sales forecast in the region of $220m for 2024. After an independent audit, the actual figure came in at $50m. Builder AI was also forced to restate its sales for 2023 after previously booked sales from resellers of its technology were not collected for long periods. The Financial Times reported Builder AI commissioned a law firm to investigate the figures and experts involved in the review told Ratia that they believed there may have been past efforts to inflate sales, it was reported. In the letter from Ratia to investors, he revealed that Builder AI had borrowed $50m last year and owed $88m in cloud fees to businesses such as Amazon. A $75m capital infusion by existing investors in March was not enough to stave off collapse. Despite its lofty valuation, the company had been grappling with a series of crises for years. One source says: 'Where did it go wrong? Everywhere.' Builder AI was founded in 2016 by Duggal, an Imperial College graduate who worked at Deutsche Bank before founding Nivio, a cloud computing business that he later sold. From the outset, the company caught the attention of the wider business world. Duggal was named an EY World Entrepreneur of the Year in 2024 and, that same year, he hosted the rapper at the 'BuilderPlex' event in Davos for the World Economic Forum. Yet as early as 2019, problems had begun to emerge. Builder AI and Duggal were sued by Robert Holdheim, a former employee, for $5m that year. Holdheim alleged he was dismissed after complaining that the company's technology at the time 'did not work as promoted and was essentially nothing more than 'smoke and mirrors''. At the heart of the allegation was a claim that Builder AI was far more reliant on humans than it let on. Holdheim claimed the company told investors apps were '80pc' built by a product it had 'barely even begun to develop'. Instead, it relied heavily on contractors in India, according to court filings. Builder AI disputed the allegations and the lawsuit was later settled. Duggal always insisted the company had been upfront that its AI was 'human-assisted'. Investors would later say that this combination of automation and human-helpers allowed apps to be built 'multitudes cheaper and faster' than traditional approaches. At a 2020 conference, Duggal said that 'AI doesn't mean Another Indian', adding 'how you translate a company's mission and where it is today to the company's aspirations are two very different things'. Later, the start-up would sue Barry Kaufman, the lawyer that had brought the claims, alleging the case had been the basis of a damaging newspaper article that had cost the business $1.2bn in an investment round. The claim was ultimately dismissed. In a further lawsuit, filed this year, the lawyer accused Builder AI of using legal strong-arming to 'intimidate' its critics and 'silence' them. Duggal, meanwhile, is involved in his own legal battles. Court records in India show that he was issued with a 'non-bailable warrant' and a demand that he come in for questioning in a case related to the collapse of Indian business Videocon, which has been the subject of a high-profile loan fraud investigation. Lawyers for Duggal have said the warrant was 'bad in law' and is 'strongly refuted'. His lawyers have insisted he is a witness in the case. The case is ongoing. Saurabh Dhoot, another Builder AI co-founder, was in 2023 named on a charge sheet brought by Indian prosecutors alleging a 'criminal conspiracy' at Videocon, which was founded by Dhoot's one-time billionaire uncle. Dhoot has not been involved with Builder AI since 2022 and has denied wrongdoing in the case. Lawyers for the Dhoot family were contacted for comment. Duggal stepped down as chief executive of Builder AI in February after the board became concerned that its projected sales for 2024 were way off the mark. The apparent accounting discrepancies that occurred under Duggal's leadership have come under legal scrutiny in recent weeks. In the days before it said it would file for administration, Builder AI received requests from US prosecutors in New York for information about its sales data, The Telegraph understands. A 'fake it till you make it' approach has long been an accepted part of the tech world, with founders and start-ups setting out ambitious visions for their products and performance as they hope to woo both investors and staff. However, investors and lenders have become less tolerant of companies that fall short as interest rates rise and following a series of high-profile failures. Still, Builder AI's dramatic end came as a shock to staff and shareholders. Investors had just injected 'rescue funding' of $75m to try and shore up the business, an effort that was quickly undone as lenders pulled support. The Telegraph also understands that Duggal agreed a $300,000 personal loan with Builder AI's chief executive, Ratia, to help meet payroll costs. The failure of Builder AI threatens to cast a shadow over the UK's AI sector at a time when Britain's start-ups are struggling to compete with their Silicon Valley peers. According to data from Dealroom, UK AI start-ups have raised about $3.1bn for the latest wave of 'generative' AI tools since 2019. US start-ups, meanwhile, have raised $84bn. Since his exit, Duggal has not been quiet. The Builder AI founder has been on panels in Dubai, where he is now based, talking up the Middle East's AI prospects on LinkedIn. Sources said he has been working independently to try and raise funds to save Builder AI or buy it out of insolvency. Duggal and his lawyers declined to comment. The founder did, however, post a note on a group for ex-Builder AI employees, many of whom have just lost their jobs. 'I know this week has been devastating for everyone,' Duggal wrote. 'Not a day goes by since I stepped away that I don't miss the builder energy.' Cryptically, the 'chief wizard', added: 'I don't think the story is done yet.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
02-06-2025
- Business
- Bloomberg
Tesla's Robotaxi Faces Key Month of Testing and Rollout
Welcome to Tech In Depth, our daily newsletter with reporting and analysis about the business of tech from Bloomberg's journalists around the world. Today, Ed Ludlow checks in on Elon Musk's accelerating plans for a Tesla robotaxi service. revelations: AI startup which recently announced plans to declare bankruptcy, faked business with the Indian social media startup VerSe Innovation for years to falsely inflate its sales, according to documents reviewed by Bloomberg and people with direct knowledge of the practice.
