VerSe Innovation rejects revenue manipulation allegations, says it did $80 million business with Builder.ai

VerSe Innovation rejects revenue manipulation allegations, says it did $80 million business with Builder.ai

VerSe Innovation, the Bengaluru-based parent of Dailyhunt and Josh, has issued a strong rebuttal to allegations of revenue manipulation in its commercial transactions with the beleaguered AI startup Builder.ai.

Calling the accusations “factually incorrect and baseless,” VerSe co-founder Umang Bedi told Moneycontrol that all revenues and expenses recorded in connection with Builder.ai were for “legitimate services rendered and delivered,” and “duly received, delivered respectively and verified.”

During the two-hour meeting, Bedi also went on to show email exchanges between Builder.ai and VerSe establishing the fact that the two had a business relationship and there were services rendered for which VerSe was billed, too.

Bedi also went back to 2021, when Builder.ai and VerSe began engaging, to show all the Jira tickets that had been raised between the two companies.

The company’s response follows news reports which alleged that Builder.ai had “faked business” with VerSe Innovation as part of a years-long effort to inflate its revenues. According to the report, both companies routinely billed each other between 2021 and 2024 in near-equal amounts, raising concerns of so-called “round-tripping”—a practice where companies artificially pump up sales by exchanging invoices for services that may not have been provided.

Bedi dismissed any such insinuation. “Any insinuation that VerSe Innovation colluded with Builder.ai to inflate revenues, engaged in reciprocal billing without corresponding services, or manipulated invoicing practices… is entirely false, defamatory, and irresponsible,” he said.

He added that over the past five years, VerSe had paid $80 million to Builder.ai for services including hyperscale cloud deployment, system migration, and custom software solutions. In return, Builder.ai paid $53 million to VerSe for advertising services.

“This balance of trade further disproves any allegation that the payments were of similar amounts and part of any coordinated arrangement or round tripping,” Bedi said.

He also said all relevant transactions had been reviewed as part of the company’s statutory FY24 audit, which concluded with an unqualified opinion from its auditor, Deloitte, confirming that VerSe’s financial statements gave a “true and fair view.”

While Deloitte flagged “internal control weaknesses” in areas such as IT systems, advertising revenue, and vendor relationships, Bedi said these did not affect the integrity of its financial reporting.

Each transaction involving Builder.ai was validated during the audit, he added, with a comprehensive review of services delivered, documentation, and payments. “These have been verified periodically by reputable independent third parties,” Bedi said.

The controversy comes at a time when Builder.ai is preparing to file for bankruptcy, following what media reports stated as a 300 percent overstatement of its 2024 sales to creditors. The startup, which once raised over $450 million from investors including Microsoft and QIA, is now under scrutiny by US prosecutors for alleged financial discrepancies.

In an earlier media interview, Bedi had called the allegations “absolutely baseless and false,” and denied that VerSe billed or recorded expenses for services that weren’t provided. “We’re not the kind of company that is in the business of inflating revenues,” he said.

Looking ahead, Bedi said the company remains focused on its goal of achieving breakeven in the second half of FY25, while strengthening internal controls. He highlighted VerSe’s next-generation, AI-first product portfolio—including NexVerse.ai, Dailyhunt Premium, Josh Audio Calling and Stories, and VerSe Collab—as key to driving future growth in India’s evolving digital ecosystem.