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Builder.ai has restated past revenues and appointed BDO to carry out its first group-level audit, as the new chief executive of one of the UK’s best-funded tech start-ups addresses “problems” under its past leadership.
The Microsoft-backed group, which says it uses artificial intelligence to make apps, lowered the revenues it previously recorded for 2023 to $140mn, chief executive Manpreet Ratia told the Financial Times. He declined to confirm the previously reported figure.
Ratia also confirmed a Bloomberg report that the company had previously lowered its forecasted revenue for the second half of 2024 by 25 per cent.
News of the restatement comes as the company tries to draw a line under the tumultuous leadership of its founder, Sachin Dev Duggal, who stepped down as chief executive in February, but remains on the group’s board. He has kept the title of “chief wizard”. He did not respond to a request for comment.
“We’ve got a great business and, trust me, I wouldn’t be sitting here talking to you if I did not believe in the business,” said Ratia, who is also a managing partner at Jungle Ventures, one of Builder.ai’s early backers.
“Do we have problems? Absolutely. Any organisation who comes and says everything is hunky-dory is probably lying.”
He added that the company was still in the “process of closing” the books for 2024, while its 2023 statements had been “restated” after having previously been “closed”.
Builder.ai, which has raised around $450mn since 2016 from leading investors including SoftBank, Insight Partners and Qatar’s sovereign wealth fund, had not previously engaged an auditor to sign off its accounts at the group level, Ratia said.
Last month, the FT reported that Builder.ai had drawn scrutiny for accounting practices that included relying on an auditor with long-standing links to Duggal.
A partner at PKF Littlejohn, the mid-tier accounting firm, previously signed off Builder.ai’s UK accounts as its senior statutory auditor for several years, despite having previously served as a director of another company also founded by Duggal.
Builder.ai’s overseas subsidiaries also employed several small audit firms in quick succession.
PKF has told the FT that it maintained “independence and integrity in full compliance with relevant rules and regulations”.
Ratia said Builder.ai had to restate its 2023 revenues because it had tried working with “resellers” in the Middle East who did not fulfil their promises about how much business they could bring in.
“Unfortunately, as we sat down towards late last year, we recognised that the channel was a bit of a problem, because even though the minimum commitment was given, we were finding it very difficult to collect from these guys,” he said.
Ratia added that the company had appointed BDO to do a group-level audit for the years 2023 to 2027 because the company had now reached the “right” levels of revenue to make such an exercise worthwhile. BDO declined to comment.
Ratia said that bank account statements showed that Builder.ai had collected more than $100mn in 2024: “So that tells you that there actually is a real business, right?”
The business has reduced its global headcount by around 270 people, from around 770, in the weeks since Ratia took over, according to a person familiar with the matter.
Ratia declined to comment on exact numbers but confirmed he had embarked on a “significant restructuring”.
The start-up separately confirmed that its chief revenue officer Varghese Cherian had resigned before Ratia’s appointment, but declined to give reasons for his departure. Cherian did not respond to a request for comment.
“What we are doing right now is, I’m just taking pause and I’m saying: ‘Hey, look, let’s review where the business is’,” Ratia said.
“Let’s go back and take a hard look at what’s working . . . Let’s double down on that. And the stuff which is not working, let’s get rid of them. Think of it as like spring cleaning.”
“Do the customers like our products? Absolutely,” he said. “Are there unhappy customers? As some of your reporting has pointed out, absolutely.”