And just like that, another one bites the dust.
While the tech industry remains relatively immune to economic challenges, intense competition is killing the weakest links, or just the unlucky ones.
Despite challenges, the tech industry is booming. Global spending on IT systems is expected to exceed $5.6 trillion in 2025, a 10% increase from 2024, according to Statista.
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This record-breaking investment is fueled by the growing demand for cutting-edge software, cloud services, and the expansion of data center infrastructure.
The widespread adoption of AI-powered tools underscores the need to acquire AI and machine learning skills. In 2024, as many as 82% of developers reported relying on AI tools to write code. ChatGPT was the most popular.
This trend is projected to persist into 2025, as AI continues to play an increasingly vital role not only for developers, but also for experts across health care, financial services, retail and e-commerce, and marketing and advertising.
However, intense competition is not the only challenge facing small tech startups. They also have to navigate a difficult economic climate marked by inflation, fluctuating tariffs, and rising interest rates.
Just recently, these challenges have taken yet another company down.
A London-based AI startup once dubbed a tech “unicorn’ has entered insolvency proceedings.
Image source: Shutterstock
Builder.ai enters insolvency proceedings after financial mismanagement
A London-based AI startup once dubbed a tech unicorn, Builder.ai has entered insolvency proceedings after financial mismanagement and leadership troubles.
The announcement came during a company-wide call on May 20, when the management admitted “problems” and informed employees it is filing for bankruptcy, reported the Financial Times.
Builder.ai, also called Engineer.ai, focused on leveraging AI tools to make designing and creating applications and websites as “easy as ordering pizza.”
The company quickly gained attention and obtained funding from most prominent firms and investors such as Microsoft (MSFT) , Qatar’s sovereign wealth fund, and various venture capitalists.
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Its valuation came close to $1 billion.
“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 wrote in a LinkedIn post.
“We will work closely with the appointed administrators to ensure an orderly process and to explore all available options for parts of the business, where possible.”
Internal audits revealed inflated revenue figures and put accounting practices under scrutiny. In April 2025, Builder.ai revised its 2023 revenue down to $140 million and reduced its 2024 projections by 25%.
Former employees claimed that the company has inflated sales figures by more than 20%, according to Bloomberg.
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The company’s new CEO Manpreet Ratia, who took the role in March, confirmed that the company had secured a $50 million debt line in October, but by the time of the leadership change, its available cash had dropped to just $7 million.
Creditors have seized its cash reserves, leaving the company unable to meet payroll obligations. Ratia also said the company owes $85 million to Amazon and $30 million to Microsoft.
Previous CEO and founder Sachin Dev Duggal already faced legal controversies, including an investigation in India.
“Are there things that could probably have been done better? Absolutely, I don’t deny that,” Ratia told Bloomberg.
‘Crunch time for those who failed to meet the expectations’
Builder.ai is one of many tech startups that have shut down over the past few years. The 2024 only eliminated names such as Ghost Autonomy (OpenAI-backed), Artifact, Shyp, Eaze, and Tally, among others.
Info-Tech Research Group Executive Counselor Phil Brunkard explained that the early genAi Boom saw many startups “jumping on the hype without focusing on solid business fundamentals and financial practices,” reported Computer World.
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While Brunkard was not suggesting that Builder.ai is an example of this, he is highlighting that having huge investors like Microsoft is known to put pressure on the companies, and returns are expected based on market anticipation.
“We have reached a plateau now, where those who overpromised their capabilities or got over-excited about the possibilities are facing a realism check and not a bank check,” he pointed out.
