Builder.AI Collapse

Builder.io is a powerful platform that combines visual development tools with AI-powered design-to-code features. While it works well in most cases, some users experience the “Builder AI collapse” issue, where the AI panel suddenly stops responding or disappears.

It’s important not to confuse Builder.io with Builder.ai, another AI-focused startup.

In May, Builder.ai filed for bankruptcy in the U.S. despite being once valued at over $1.3 billion and backed by giants like Microsoft and the Qatar Investment Authority.

Key reasons behind its collapse included:

• Inflated financial reports (claiming $220M in sales vs. ~$50M actual)
• Heavy reliance on human engineers in India, despite marketing itself as fully AI-powered
• Founder Sachin Dev Duggal’s multimillion-dollar share sales before insolvency
• Creditors seizing over $37–50 million from its accounts
• Massive layoffs, cutting nearly 80% of its workforce

The case became a cautionary tale of “AI washing”—when startups exaggerate AI capabilities to attract investors.