London-based artificial intelligence startup Builder.ai, which is currently facing multiple allegations and is staring at bankruptcy, allegedly “faked business deals with Indian social media startup VerSe Innovation to falsely inflate its sales,” according to a Bloomberg report.

However, in a written statement sent to AIM, VerSe Innovation said it “denounces baseless allegations in commercial dealings with Builder.ai”.

The report, referring to documents the media company claims to have access to, stated that the two companies routinely billed each other for roughly the same amounts between 2021 and 2024 in a practice allegedly known as “round-tripping”. 

It was alleged that Builder.ai used this tactic to inflate the revenue figures it presented to investors. In many cases, products and services were reportedly not actually provided by either company for these payments. 

VerSe’s Response

In response to the allegations, VerSe Innovation Pvt Ltd said that it “categorically denies all allegations—whether express or implied—made against the company in connection with its commercial dealings with Builder.ai”. 

“These allegations are not only factually incorrect and baseless, but also defamatory and misleading,” it said.  

The company affirmed that “revenue recorded in its financial statements, including the revenue from Builder.ai, relates to legitimate services rendered and delivered—either directly or through its subsidiaries”. 

“Similarly, expenses recorded by VerSe Innovation correspond only to services actually received, including from Builder.ai or its affiliated entities. This has been verified periodically by reputable independent third parties,” it said. 

“Any insinuation that VerSe Innovation colluded with Builder.ai to inflate revenues, engaged in reciprocal billing without corresponding services, or manipulated invoicing practices to conceal any arrangement or payments was intentionally interspersed in the timing and amount of the invoices to avoid suspicion is entirely false, defamatory, and irresponsible. 

“VerSe Innovation rejects any such mischaracterisations and reiterates its commitment to transparency and legal compliance,” it explained. 

Elaborating on its engagement with Builder.ai, it said over the past five years, VerSe Innovation engaged Builder.ai for services including hyperscale cloud deployment and system migration, customised app development and software solutions—at a cumulative spend of $80 million. 

“During the same period, Builder.ai engaged VerSe Innovation for advertising services for its products and services, resulting in a total payment of USD 53 million to VerSe Innovation. This balance of trade further disproves any allegation that the payments were of similar amounts and part of any coordinated arrangement or round tripping,” the company said.

Countering the allegations, the company further clarified that several transactions, including those involving Builder.ai, were thoroughly examined as part of the statutory audit for FY24. “Each transaction was validated and checked thoroughly, including review of services rendered and delivered, with relevant supporting documents of payments against the same,” it said. 

The company said that the FY24 audit concluded with an unqualified opinion from the auditors, confirming an accurate and fair view of VerSe’s financial statements. 

“While certain internal control weaknesses were noted, these did not impact the unqualified true and fair opinion of the auditors on the financial statements, as is self-evident from this opinion,” it added. 

Builder.ai’s Downfall

Builder.ai, a no/low-code tech startup founded in 2016 by Imperial College graduate Sachin Dev Duggal, describes itself as an “AI-powered composable software platform” that enables users to create web and mobile apps faster and more affordably than traditional methods. 

Formerly known as Engineer.ai, the company gained significant attention early on, attracting major backers, including Microsoft, in 2023 and reaching a peak valuation of $1.5 billion. However, the company recently filed for bankruptcy.

It allegedly outsourced its job to 700 human engineers to write the code Builder.ai claimed was generated by its Lego-style artificial intelligence tech platform. 

On its official LinkedIn account, Builder.ai declared, “We will be entering into insolvency proceedings and will appoint an administrator to manage the company’s affairs.”

“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,” it added.

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