London/New Delhi, May 30, 2025 — In a shocking turn of events, London-based AI startup Builder.ai, once valued at $1.5 billion, is now facing bankruptcy after being accused of inflating revenues through fake business deals with Indian tech company VerSe Innovation, the parent of Dailyhunt.
Alleged Financial Misconduct Uncovered
According to a report by Bloomberg, Builder.ai and VerSe Innovation allegedly engaged in a practice called “round-tripping” between 2021 and 2024. The companies reportedly raised fake invoices—charging each other for services that were never actually provided. This allowed them to artificially boost their revenue figures, misleading investors and painting a false picture of rapid business growth.
Internal audits revealed that Builder.ai may have overstated its 2024 revenue by 300%. Previously reported figures of $220 million in revenue for 2024 were later slashed to $55 million. Similarly, the company’s 2023 revenue was revised from $180 million to just $45 million. These discrepancies have raised serious concerns about governance and oversight within the fast-growing startup.
VerSe Denies Involvement
In response to the allegations, VerSe Innovation has denied any wrongdoing. Co-founder Umang Bedi stated that all transactions with Builder.ai were for legitimate business services—such as cloud computing and digital advertising. He also emphasized that the deals were validated by third-party firms.
Despite the denial, the controversy has cast a shadow over the credibility of both companies and has raised red flags among investors in the broader Indian startup ecosystem.
Fallout and Industry Impact
Builder.ai’s collapse serves as a cautionary tale for the startup ecosystem, especially in the booming AI and SaaS sectors. The incident raises pressing questions about the lack of due diligence and the aggressive pursuit of valuation growth, often at the cost of transparency.
Analysts suggest that such incidents could make investors more cautious, leading to stricter audits and regulatory scrutiny. With global funding for startups already tightening, scandals like this can further erode trust in venture-backed companies.
What’s Next?
With Builder.ai now on the brink of bankruptcy, and VerSe Innovation under the spotlight, the case is likely to spark investigations and perhaps legal actions. More details are expected to emerge as financial regulators and investors dig deeper into the transactions.
Key Takeaway:
As startups race toward innovation and scale, this incident serves as a harsh reminder that strong governance, ethical practices, and financial accountability must be at the core of every venture—especially those handling massive investor capital
