When AI Hype Backfires: Builder.ai — From Billion-Dollar Unicorn to a Cautionary Tale
Artificial intelligence is growing at a rapid pace, with startups promising breakthroughs in industries and attracting billions in investment. Among these was Builder.ai, a London-based company founded in 2016 by an Indian entrepreneur. Once valued at over $1.5 billion, it was known for its game-changing platform that could let anyone build custom apps quickly and affordably with the help of AI.
Yet in 2025, Builder.ai collapsed dramatically, filing for bankruptcy across multiple countries and laying off nearly 80% of its workforce. What was once a celebrated unicorn has become a cautionary tale, exposing not only the risks of hype-driven growth in AI but also inflicting reputational damage on Indian founders in the global startup ecosystem.
The Rise: Big Promises, Big Investors
Builder.ai branded itself as a no-code/low-code app development platform, where its AI assistant “Natasha” would guide customers in creating apps without technical expertise. The pitch was simple and attractive: app development was made “as easy as ordering pizza.” The story resonated with major investors. Backed by SoftBank, Microsoft, and Qatar’s sovereign wealth fund, Builder.ai raised more than $450 million. It scaled rapidly, positioning itself as one of Europe’s most promising AI startups.
The Cracks Appear
Behind the glamour, the first cracks appeared as early as 2019, when The Wall Street Journal reported that Builder.ai’s platform depended far more on human engineers than on the AI automation it advertised. In reality, the much-hyped AI assistant “Natasha” was often just “a guy instead”, i.e., skilled developers in India manually writing code behind the scenes on whose backs the company expanded aggressively.
The real blow came from Builder.ai’s finances. The company was accused of inflating revenue figures by 300%, with alleged use of round-tripping tactics involving fake invoices that inflated financials. While it publicly projected revenues of $220 million in 2024, its actual figure was closer to $55 million. When this reality surfaced, investor confidence was lost quickly, and the company’s liabilities ballooned to nearly $100 million, with less than $ 10 million in assets remaining.
Collapse and Legal Scrutiny
By 2025, the company’s foundations had crumbled. The founder stepped down as CEO but retained the unusual title of “Chief Wizard.” Massive debts to AWS, Microsoft, and other partners mounted into the hundreds of millions. Assets were seized, and the company filed for bankruptcy in the U.S., UK, India, and the UAE.
For clients, the collapse meant abandoned projects. For employees, around 1,000 of them, it meant sudden unemployment. And for investors, it was a devastating loss. The Securities and Exchange Commission and U.S. Attorney’s Office in New York have since launched investigations into potential fraud and investor misrepresentation.
Reputational Damage: Impact on Indian Founders
Perhaps the most enduring consequence of Builder.ai’s downfall is the hit to the credibility of Indian founders on the global stage.
For years, Indian entrepreneurs have earned trust in global tech circles, with leaders heading companies from Google to Microsoft. Indian-led startups abroad were viewed as reliable, innovative, and growth-driven. Builder.ai’s collapse disrupts this narrative.
The allegations of inflated revenue, AI exaggeration, and questionable governance risk reinforcing skepticism among global investors regarding Indian organisational ethics. For other Indian founders seeking international capital, the road has now become tougher: stricter due diligence, harsher scrutiny of claims, and slower trust-building.
This reputational damage arrives at a critical time when India is positioning itself as a global hub for AI and leads the world in AI skill penetration. Rather than highlighting the strength of India’s entrepreneurial and talent ecosystem, the fall of Builder.ai has drawn attention to the risks of overpromising and underdelivering.
Conclusion
The fall of Builder.ai is more than the bankruptcy of one AI unicorn. It is a warning to companies against chasing hyper growth fueled by the riding of the AI wave. While the company’s downfall exposed flaws in governance and accountability, its deeper impact lies in how it dented trust. To drive AI and technology innovation, startups must move beyond flashy valuations and commit to authentic innovation, transparency, and financial integrity.
References
- https://www.moodys.com/web/en/us/insights/lending/moodys-early-warning-in-action-builder-ai.html#:~:text=Despite%20marketing%20itself%20as%20an,fake%20invoices%20that%20inflated%20financials.
- https://today-innovation.webflow.io/unveiling-the-power-of-natasha-an-ai-assistant-of-builder-ai-to-revolutionize-app-generation
- https://finance.yahoo.com/news/builder-ais-shocking-450m-fall-170009323.html
- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2108810
- https://www.cnbctv18.com/technology/how-a-london-based-startups-artificial-ai-gambit-backfired-ws-l-19613692.htm#
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Introduction
The rapid advancement of technology, including generative AI, offers immense benefits but also raises concerns about misuse. The Internet Watch Foundation reported that, as of July 2024, over 3,500 new AI-generated child sexual abuse images appeared on the dark web. The UK’s National Crime Agency records 800 monthly arrests for online child threats and estimates 840,000 adults as potential offenders. In response, the UK is introducing legislation to criminalise AI-generated child exploitation imagery, which will be a part of the Crime and Policing Bill when it comes to parliament in the next few weeks, aligning with global AI regulations like the EU AI Act and the US AI Initiative Act. This policy shift strengthens efforts to combat online child exploitation and sets a global precedent for responsible AI governance.
Current Legal Landscape and the Policy Gap
The UK’s Online Safety Act 2023 aims to combat CSAM and deepfake pornography by holding social media and search platforms accountable for user safety. It mandates these platforms to prevent children from accessing harmful content, remove illegal material, and offer clear reporting mechanisms. For adults, major platforms must be transparent about harmful content policies and provide users control over what they see.
However, the Act has notable limitations, including concerns over content moderation overreach, potential censorship of legitimate debates, and challenges in defining "harmful" content. It may disproportionately impact smaller platforms and raise concerns about protecting journalistic content and politically significant discussions. While intended to enhance online safety, these challenges highlight the complexities of balancing regulation with digital rights and free expression.
The Proposed Criminalisation of AI-Generated Sexual Abuse Content
The proposed law by the UK criminalises the creation, distribution, and possession of AI-generated CSAM and deepfake pornography. It mandates enforcement agencies and digital platforms to identify and remove such content, with penalties for non-compliance. Perpetrators may face up to two years in prison for taking intimate images without consent or installing equipment to facilitate such offences. Currently, sharing or threatening to share intimate images, including deepfakes, is an offence under the Sexual Offences Act 2003, amended by the Online Safety Act 2023. The government plans to repeal certain voyeurism offences, replacing them with broader provisions covering unauthorised intimate recordings. This aligns with its September 2024 decision to classify sharing intimate images as a priority offence under the Online Safety Act, reinforcing its commitment to balancing free expression with harm prevention.
Implications for AI Regulation and Platform Responsibility
The UK's move aligns with its AI Safety Summit commitments, placing responsibility on platforms to remove AI-generated sexual abuse content or face Ofcom enforcement. The Crime and Policing Bill is expected to tighten AI regulations, requiring developers to integrate safeguards against misuse, and the licensing frameworks may enforce ethical AI standards, restricting access to synthetic media tools. Given AI-generated abuse's cross-border nature, enforcement will necessitate global cooperation with platforms, law enforcement, and regulators. Bilateral and multilateral agreements could help harmonise legal frameworks, enabling swift content takedown, evidence sharing, and extradition of offenders, strengthening international efforts against AI-enabled exploitation.
Conclusion and Policy Recommendations
The Crime and Policing Bill marks a crucial step in criminalising AI-generated CSAM and deepfake pornography, strengthening online safety and platform accountability. However, balancing digital rights and enforcement remains a challenge. For effective implementation, industry cooperation is essential, with platforms integrating detection tools and transparent reporting systems. AI ethics frameworks should prevent misuse while allowing innovation, and victim support mechanisms must be prioritised. Given AI-driven abuse's global nature, international regulatory alignment is key for harmonised laws, evidence sharing, and cross-border enforcement. This legislation sets a global precedent, emphasising proactive regulation to ensure digital safety, ethical AI development, and the protection of human dignity.
References
- https://www.iwf.org.uk/about-us/why-we-exist/our-research/how-ai-is-being-abused-to-create-child-sexual-abuse-imagery/
- https://www.reuters.com/technology/artificial-intelligence/uk-makes-use-ai-tools-create-child-abuse-material-crime-2025-02-01/
- https://www.financialexpress.com/life/technology-uk-set-to-ban-ai-tools-for-creating-child-sexual-abuse-images-with-new-laws-3735296/
- https://www.gov.uk/government/publications/national-crime-agency-annual-report-and-accounts-2023-to-2024/national-crime-agency-annual-report-and-accounts-2023-to-2024-accessible#part-1--performance-report
Introduction
In recent years, the online gaming sector has seen tremendous growth and is one of the fastest-growing components of the creative economy, contributing significantly to innovation, employment generation and export earnings. India possesses a large pool of skilled young professionals, strong technological capabilities and a rapidly growing domestic market, which together provide an opportunity for the country to assume a leadership role in the global value chain of online gaming. With this, the online gaming industry has also faced an environment of exploitation, abuse, with notable cases of fraud, money laundering, and other emerging cybercrimes. In order to protect the interests of players, ensure fair play and competition, safe and secure online gaming environment, the need for introducing and establishing dedicated gaming regulation was a need of the hour.
On 20 August 2025, the Union government introduced a new bill, ‘Promotion and Regulation of Online Gaming Bill, 2025’ in Lok Sabha that seeks to prohibit online money gaming, including advertisements and financial transactions related to such platforms. From the introduction, the said bill was passed at 5 PM on the same date. Further, the upper house of parliament (Rajya Sabha) passed the bill on 21st August 2025. The bill can be seen as a progressive step towards building safer online gaming spaces for everyone, especially for our youth and combating the emerging cybercrime threats present in the online gaming landscape.
Key Highlights of the Bill
The Bill extends to the whole of India. It also applies to any online money gaming service offered within India or operated from outside the country but accessible in India.
- Definition of E-sports:
Section 2(1)(c) of the Bill defines e-sports as:-
(i) is played as part of multi-sports events;
(ii) involves organised competitive events between individuals or teams, conducted in multiplayer formats governed by predefined rules;
(iii) is duly recognised under the National Sports Governance Act, 2025, and registered with the Authority or agency under section 3;
(iv) has outcome determined solely by factors such as physical dexterity, mental agility, strategic thinking or other similar skills of users as players;
(v) may include payment of registration or participation fees solely for the purpose of entering the competition or covering administrative costs and may include performance-based prize money by the player; and
(vi)shall not involve the placing of bets, wagers or any other stakes by any person, whether or not such person is a participant, including any winning out of such bets, wagers or any other stakes;
- Prohibition of Online Money Gaming and Advertisement thereof
The Bill prohibits the offering of online money games and online money gaming services. It also bans all forms of advertisements or promotions connected to online money games. This includes endorsements by individuals or entities. - Financial Transactions
Banks, financial institutions, and other intermediaries are barred from facilitating transactions related to online money gaming services. - Criminal Liability
Violation of the provisions on online money gaming can result in imprisonment for up to three years, or a fine of up to ₹1 crore, or both. Repeat offenders face stricter punishment with higher fines and longer jail terms. - Cognizable and Non-Bailable Offences
Offences relating to offering online money gaming services and facilitating financial transactions for such games are categorised as cognizable and non-bailable. This gives law enforcement agencies greater power to act without requiring prior approval.
In conversation with CyberPeace ~
Shailendra Vikram Singh, Former Deputy Secretary (Cyber & Information Security), Ministry of Home Affairs, GOI . He highlighted that
"The passage of the Promotion and Regulation of Online Gaming Bill, 2025 in the Lok Sabha highlights the government’s growing priority on national security, public safety, and health in digital regulation. Unfortunately, the real money gaming industry, despite its growth and promise, did not take proactive steps to address these concerns. The absence of safeguards and engagement left the government with no choice but to adopt a blanket ban."Having worked on this issue from both the government and industry side, the clear lesson is that in sensitive digital sectors, early regulatory alignment and constructive dialogue are not optional but essential. Going forward, collaboration is the only way to achieve a balance between innovation and responsibility.”
CyberPeace Outlook
The Promotion and Regulation of Online Gaming Bill, 2025, marks a decisive policy shift by simultaneously fostering the growth of e-sports, educational and social gaming, and imposing an absolute prohibition on online money games. By recognising e-sports as legitimate, skill-based competitive sports under the National Sports Governance Act, 2025, and establishing a central Authority for oversight, registration, and regulation, the Bill creates an institutional framework for safe and responsible development of the sector. The Bill completely bans real money games (RMGs), regardless of whether they are skill-based or chance-based or both, hence it poses significant questions on RMG companies' legal standing, upon which the gaming industry has raised its conundrum. Further, it addresses urgent threats such as cybercrime, gaming addiction, online betting, money laundering, and the misuse of gaming platforms for illicit activities. The move reflects a balanced approach, encouraging innovation and digital skill-building, while safeguarding public order, consumer interests, and financial integrity.
References
- https://prsindia.org/files/bills_acts/bills_parliament/2025/Bill_Text-Online_Gaming_Bill_2025.pdf
- https://prsindia.org/billtrack/the-promotion-and-regulation-of-online-gaming-bill-2025
- https://www.hindustantimes.com/india-news/rajya-sabha-clears-online-gaming-bill-a-day-after-lok-sabha-approval-101755766847840.html
Artificial Intelligence (AI) provides a varied range of services and continues to catch intrigue and experimentation. It has altered how we create and consume content. Specific prompts can now be used to create desired images enhancing experiences of storytelling and even education. However, as this content can influence public perception, its potential to cause misinformation must be noted as well. The realistic nature of the images can make it hard to discern as artificially generated by the untrained eye. As AI operates by analysing the data it was trained on previously to deliver, the lack of contextual knowledge and human biases (while framing prompts) also come into play. The stakes are higher whilst dabbling with subjects such as history, as there is a fine line between the creation of content with the intent of mere entertainment and the spread of misinformation owing to biases and lack of veracity left unchecked. AI-generated images enhance storytelling but can also spread misinformation, especially in historical contexts. For instance, an AI-generated image of London during the Black Death might include inaccurate details, misleading viewers about the past.
The Rise of AI-Generated Historical Images as Entertainment
Recently, generated images and videos of various historical instances along with the point of view of the people present have been floating all over the internet. Some of them include the streets of London during the Black Death in the 1300s in England, the eruption of Mount Vesuvius at Pompeii etc. Hogne and Dan, two creators who operate accounts named POV Lab and Time Traveller POV on TikTok state that they create such videos as they feel that seeing the past through a first-person perspective is an interesting way to bring history back to life while highlighting the cool parts, helping the audience learn something new. Mostly sensationalised for visual impact and storytelling, such content has been called out by historians for inconsistencies with respect to details particular of the time. Presently, artists admit to their creations being inaccurate, reasoning them to be more of an artistic interpretation than fact-checked documentaries.
It is important to note that AI models may inaccurately depict objects (issues with lateral inversion), people(anatomical implausibilities), or scenes due to "present-ist" bias. As noted by Lauren Tilton, an associate professor of digital humanities at the University of Richmond, many AI models primarily rely on data from the last 15 years, making them prone to modern-day distortions especially when analysing and creating historical content. The idea is to spark interest rather than replace genuine historical facts while it is assumed that engagement with these images and videos is partly a product of the fascination with upcoming AI tools. Apart from this, there are also chatbots like Hello History and Charater.ai which enable simulations of interacting with historical figures that have piqued curiosity.
Although it makes for an interesting perspective, one cannot ignore that our inherent biases play a role in how we perceive the information presented. Dangerous consequences include feeding into conspiracy theories and the erasure of facts as information is geared particularly toward garnering attention and providing entertainment. Furthermore, exposure of such content to an impressionable audience with a lesser attention span increases the gravity of the matter. In such cases, information regarding the sources used for creation becomes an important factor.
Acknowledging the risks posed by AI-generated images and their susceptibility to create misinformation, the Government of Spain has taken a step in regulating the AI content created. It has passed a bill (for regulating AI-Generated content) that mandates the labelling of AI-generated images and failure to do so would warrant massive fines (up to $38 million or 7% of turnover on companies). The idea is to ensure that content creators label their content which would help to spot images that are artificially created from those that are not.
The Way Forward: Navigating AI and Misinformation
While AI-generated images make for exciting possibilities for storytelling and enabling intrigue, their potential to spread misinformation should not be overlooked. To address these challenges, certain measures should be encouraged.
- Media Literacy and Awareness – In this day and age critical thinking and media literacy among consumers of content is imperative. Awareness, understanding, and access to tools that aid in detecting AI-generated content can prove to be helpful.
- AI Transparency and Labeling – Implementing regulations similar to Spain’s bill on labelling content could be a guiding crutch for people who have yet to learn to tell apart AI-generated content from others.
- Ethical AI Development – AI developers must prioritize ethical considerations in training using diverse and historically accurate datasets and sources which would minimise biases.
As AI continues to evolve, balancing innovation with responsibility is essential. By taking proactive measures in the early stages, we can harness AI's potential while safeguarding the integrity and trust of the sources while generating images.
References:
- https://www.npr.org/2023/06/07/1180768459/how-to-identify-ai-generated-deepfake-images
- https://www.nbcnews.com/tech/tech-news/ai-image-misinformation-surged-google-research-finds-rcna154333
- https://www.bbc.com/news/articles/cy87076pdw3o
- https://newskarnataka.com/technology/government-releases-guide-to-help-citizens-identify-ai-generated-images/21052024/
- https://www.technologyreview.com/2023/04/11/1071104/ai-helping-historians-analyze-past/
- https://www.psypost.org/ai-models-struggle-with-expert-level-global-history-knowledge/
- https://www.youtube.com/watch?v=M65IYIWlqes&t=2597s
- https://www.vice.com/en/article/people-are-creating-records-of-fake-historical-events-using-ai/?utm_source=chatgpt.com
- https://www.reuters.com/technology/artificial-intelligence/spain-impose-massive-fines-not-labelling-ai-generated-content-2025-03-11/?utm_source=chatgpt.com
- https://www.theguardian.com/film/2024/sep/13/documentary-ai-guidelines?utm_source=chatgpt.com
