Builder.ai, one of the best-funded British tech start-ups, faces increasing criticism over potential conflicts of interest in auditing. At the center is a longstanding connection between the auditor Paul Goldwin from the British auditing company PKF Littlejohn and company founder Sachin Dev Duggal.

Goldwin, who has been signing off Builder.ai's financial statements in the UK as the responsible auditor since 2021, was previously a director of another company founded by Duggal. Furthermore, Duggal used PKF Littlejohn's business premises as the official address when founding Builder.ai. Experts in corporate governance speak of potential conflicts of interest in light of these connections, which need to be examined.

The auditing practice of foreign subsidiaries is also seen as particularly critical. In India and Singapore, auditors changed multiple times within a few years – sometimes to little-known individuals or small firms. One of these companies, Oakfield & Associates from Singapore, also audited the later spectacularly failed crypto hedge fund Three Arrows Capital.

Builder.ai defended its approach and referred to "operational scaling and revenue segmentation" as well as regulatory requirements in the respective countries. In the meantime, it has transitioned to a Big Four auditor for group audits and a Big Four service provider for internal audits.

The increasing criticism hits the start-up in a sensitive phase. After the previous CFO resigned in July 2023, the position is still vacant. Founder Duggal also recently stepped down as CEO and moved to a less operational role as "Chief Wizard." However, the company emphasizes that the CEO succession has been strategically prepared.

The growing governance concerns contrast with the company's prominent list of investors. Microsoft, SoftBank, the Qatar Investment Authority, and Insight Partners have so far invested around $450 million in Builder.ai, which specializes in AI-powered app development.

PKF Littlejohn stated that it had reviewed all independence issues before taking on the mandate. There is no business connection between SMX - the company that connected Goldwin with Duggal - and Builder.ai. The startup itself also denied any connection to SMX upon inquiry.

Nevertheless, the continued personnel overlaps over the years and the frequent changes of small auditing firms in key subsidiaries raise questions about the quality and consistency of corporate governance. Financial expert Paul Barnes sees "clear deviations from common practice among internationally operating companies" in this approach.