British startup Builder.ai, who recently announced plans to burn, simulated business with the Indian company Vers Innovation to artificially inflate its revenues between 2021 and 2024, according to documents and sources heard by Bloomberg.
According to the report, the two companies would have issued invoices to each other in similar amounts over four years, without effective services. The practice is known as “Round-Tripping”, an accounting device used to mask fictional recipes. The operation would have served to attract investors and raise Builder’s assessment.ai, which was valued at $ 1.5 billion.
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Sources with direct knowledge of the transactions stated to the Bloomberg that the products and services mentioned in the invoices were not delivered. Builder.ai would have received about $ 60 million from Verse during this period, while sending equivalent payments to the Indian company and its subsidiary Quark Media Tech.
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Verse denies the accusations. UMNG BEDI, co -founder of the company, told the Bloomberg that “it is absolutely false and unfounded” that the company has registered expenses or revenues without consideration. Verse said the services exchanged with Builder.ai were verified by external auditors and classified the accusations as “defamatory and irresponsible.”
Builder.ai, which offered tools for application development without coding, had already been accused of inflating their 2024 revenue projections by up to 300%, which would have motivated creditors to confiscate their resources. The company was also summoned by US prosecutors to deliver financial documents.
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Verse, owner of the Dailyhunt app and the Josh video platform, has about 350 million monthly users. In 2022, it was valued at $ 5 billion after capturing $ 805 million with investors such as Canada Pension Plan Investment Board. Google and Goldman Sachs also invested in the company.
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In a financial report of March 2024, Deloitte pointed out flaws in Verse’s internal controls, including IT problems, advertising and supplier relationship. Nevertheless, the audit considered the company’s accounts as “true and fair.”
Builder.ai founder Sachin Dev Duggal left CEO in February and was replaced by Manpret Ratia. Three months later, the company announced its closure for lack of viable alternatives.
