Circuit Breaker Labs has created AI agents that it likens to an army of crash-test dummies, used to test models on their ability to detect dangerous, psychologically harmful interactions. The startup is one of TechCrunch's 2026 Startup Battlefield 200 finalists and will pitch at TechCrunch Disrupt in San Francisco from October 13-15.
The founders, siblings Shirali and Arul Nigam, were motivated by Sewell Setzer, the 14-year-old who developed an emotional attachment to a Character.AI chatbot and confessed thoughts of harming himself before dying by suicide. The chatbot, the parents alleged in a 2024 lawsuit, encouraged him. Arul, Circuit Breaker Labs' CTO, said the bot may not have understood what words like "I want to be with you" really implied.
"A lot of people, especially young people, turn to these systems for support, and usually they aren't actually getting the help they need. But in many cases, they're actively being harmed, and people unfortunately have taken their lives already," Arul said. "Those sorts of safety vulnerabilities, where people aren't necessarily actively trying to break the system — they're engaging in a natural way — and the system has context pollution or it doesn't understand the nuance, and then takes really dangerous action, we're trying to prevent that."
The startup works with human domain experts to build hyper-realistic user simulations for red-team tests, which are adversarial tests meant to uncover weaknesses. The tests reflect real human speech patterns, slang, coded language and typos, and Circuit Breaker Labs runs tens of thousands to hundreds of thousands of simulated interactions per day. It then uses a proprietary scoring method to create auditable, explainable scores.
Shirali, the CEO, said differences such as a six-year-old girl versus a 45-year-old man, or a first-language versus second-language English speaker, or gamer slang versus other slang, can trip up a model. "Models are really good at handling standard speech patterns, but nobody actually talks like that and so if the model misunderstands nuance or slang, it can go really badly," she said.
Circuit Breaker Labs currently operates as an AI safety testing lab for high-risk AI applications such as AI coaching, journaling or other mental health support apps, though Arul declined to name its marquee customers. The startup has a working product but is in the very early stages, with only five employees, including the Nigam siblings. Eventually, the testing platform could be applied to any app where someone may fall down an "AI psychosis" hole, where the human is at risk of developing a parasocial relationship with a chatbot.
Arul said people are becoming more sceptical of AI or more resistant to adopt it, adding that while scepticism is healthy, banning a potentially valuable tool over safety concerns would be "regressive." Circuit Breaker Labs believes the answer to those fears is making AI safer. "We want to help build that trust for people," Arul said.