The collapse of Builder.ai exposes the growing threat of “FOMO investing,” according to an expert in tech growth intelligence. Builder had become one of Britain’s best-funded startups, but is now filing for bankruptcy due to financial problems. The insolvency comes after enormous sums were invested into the business. Big-name backers including Microsoft and Qatar’s sovereign wealth fund had poured a total of over $500mn into the startup, which aimed to simplify software development with AI. The funding gave Builder a coveted unicorn status, with a valuation exceeding $1.3bn. But the eye-watering sums couldn’t keep the business afloat. Builder blamed the downfall on “historic challenges and past decisions” that strained its financial position.The 💜 of EU techThe latest rumblings from the EU tech scene, a story from our wise ol' founder Boris, and some questionable AI art. It's free, every week, in your inbox. Sign up now! The company has been accused of inflating sales figures under the leadership of Sachin Dev Duggal, the startup’s founder. Duggal stepped down as CEO in February, but retained the role of “chief wizard.” His replacement as chief executive, Manpreet Ratia, told employees this week that the company was filing for bankruptcy. Ratia said “unexpected and irreversible action” from lenders had triggered the company’s collapse.   Carrie Osman, CEO of growth intelligence firm Cruxy, highlighted another cause: “FOMO investing.” “Technology like GenAI has been massively overhyped in recent years and investors and boards are under increasing pressure to find the latest, sexiest uses for AI,” she said. “Driven by FOMO rather than fundamentals, investors are rushing into deals with minimal scrutiny, inflating valuations and sidelining due diligence.” Her warning comes amid an extended “AI gold rush.” Since the launch of ChatGPT in 2022, investors have heavily focused their funds on artificial intelligence companies. Approximately 40% of last year’s US venture cash came from funds that “list AI as a focus,” according to a report released this week by Silicon Valley Bank (SVB). In 2021, the proportion was just 10%. SVB also discovered a growing number of “zombiecorns” — unicorns with poor revenue growth and unit economics. Builder has become another member of the injured flock. Osman warned that more of them are set to emerge. “Microsoft and others failed to capture the true value and ROI from Builder’s product and didn’t dig below the headlines and hype,” she said. “This isn’t the first case of disastrous FOMO we’ve seen over the years, either — Zymergen, Frank, and Theranos are all famous examples. And as AI washing continues, this won’t be the last case.” The future of AI will be a hot topic at TNW Conference, which takes place on June 19-20 in Amsterdam. Tickets for the event are now on sale — use the code TNWXMEDIA2025 at the checkout to get 30% off. Story by Thomas Macaulay Managing editor Thomas is the managing editor of TNW. He leads our coverage of European tech and oversees our talented team of writers. Away from work, he e (show all) Thomas is the managing editor of TNW. He leads our coverage of European tech and oversees our talented team of writers. Away from work, he enjoys playing chess (badly) and the guitar (even worse). Get the TNW newsletter Get the most important tech news in your inbox each week. Also tagged with

AI software company Builder.ai is entering insolvency proceedings, a company spokesperson confirmed to TechCrunch. The Microsoft-backed unicorn, which has raised more than $450 million in funding, rose to prominence for its AI-based platform that aimed to simplify the process of building apps and websites. According to the spokesperson, Builder.ai, also known as Engineer.ai Corporation, is appointing 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,” the company said in a statement. “Our immediate priority is to support our employees, customers, and partners through this difficult time. 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.” Builder.ai has faced major leadership shakeups and financial issues over the past few months. In March, it was reported that the company last summer lowered its estimated revenue by 25% for the second half of 2024. In February, the company appointed a new CEO, Manpreet Ratia. Builder.ai hired auditors to study its financials, indicating that something may have been off behind the scenes. According to Bloomberg, former employees alleged that the company had inflated sales figures by more than 20% on multiple occasions. Before Engineer.ai largely rebranded to Builder.ai, it attracted minor scandal. Engineer.ai claimed to have built a largely automated app development platform, but the platform in truth relied heavily on human engineers, according to The Wall Street Journal. Techcrunch event Join us at TechCrunch Sessions: AI Secure your spot for our leading AI industry event with speakers from OpenAI, Anthropic, and Cohere. For a limited time, tickets are just $292 for an entire day of expert talks, workshops, and potent networking. Exhibit at TechCrunch Sessions: AI Secure your spot at TC Sessions: AI and show 1,200+ decision-makers what you’ve built — without the big spend. Available through May 9 or while tables last. Berkeley, CA | June 5 REGISTER NOW Topics