Byju’s, once a highly valued edtech start-up and a favorite among investors during the pandemic, has experienced a significant decline in its fortunes due to recent operational and financial setbacks. Experts view this as a necessary correction in India’s start-up landscape.
According to Shriram Subramanian, head of an independent corporate governance research firm, Byju’s rapid growth has been too much, too soon.
Founded in 2011, Byju’s introduced its learning app in 2015 and quickly gained popularity, reaching 15 million subscribers by 2018 and achieving unicorn status with a valuation of $1 billion.
During the Covid-19 pandemic, Byju’s expanded extensively as students turned to online education during lockdowns. However, the company incurred a loss of $327 million in 2021, 17 times more than the previous year.
Since then, Byju’s has experienced a significant downturn. Its valuation dropped from $22 billion (£17.28 billion) last year to $5.1 billion this year, as determined by Prosus NV, its largest investor and shareholder.
The company did not respond to queries from the BBC.
Shriram Subramanian explains that after the pandemic, a downturn was expected when children returned to physical schools. However, Byju’s continued to grow, and investors continued to pour money into it without recognizing the signs of an impending downturn.
Angel investor Aniruddha Malpani criticizes Byju’s business model, claiming that the company’s success was based on inflated valuations rather than actual value.
Byju’s experienced exponential growth during the pandemic and went on an acquisition spree in 2021, spending $2 billion to acquire edtech start-ups such as WhiteHat Jr, Aakash, Toppr, Epic, and Great Learning. This propelled Byju’s to become India’s most valued start-up, surpassing digital payments platform Paytm.
Byju’s invested heavily in marketing, enlisting Bollywood superstar Shah Rukh Khan and football star Lionel Messi as brand ambassadors. The company became the primary sponsor of the Indian cricket team and an official sponsor of the 2022 FIFA World Cup.
However, in recent months, Byju’s has faced numerous complaints from parents who accuse the company of not delivering on its promises. Parents claim that they were coerced into purchasing courses they couldn’t afford, only to receive inadequate services. Some customers have also accused the company of employing predatory practices to exploit them.
Byju’s, once a highly valued edtech start-up, has faced numerous challenges including complaints from former employees and parents, government investigations, and legal disputes. The firm has denied allegations and faced financial and operational setbacks.
Former employees complained of a high-pressure sales culture and unrealistic targets, leading to thousands of layoffs to reduce costs. Byju’s denied these allegations.
In April, Indian authorities raided Byju’s Bengaluru office for suspected violations of foreign exchange laws. Byju’s denied wrongdoing. In May, lenders filed a lawsuit in a US court, accusing Byju’s of defaulting on payments and breaching loan agreement terms. Byju’s denied the accusations.
Byju’s faced more difficulties in June, including missed interest payments and subsequent lawsuits against lenders. The company initiated another round of layoffs and experienced auditors quitting due to delays in submitting financial statements.
Board members also resigned, leaving only CEO Byju Raveendran, his wife Divya Gokulnath, and brother Riju Raveendran on the board. Byju’s is reportedly in talks to restructure its debt.
There were calls for the CEO’s resignation, but some investors denied these claims. The delayed financial statements and overestimation of the edtech sector’s potential during the pandemic were criticized.
Experts emphasize the need for technology in conjunction with safe learning environments and adult supervision for children.
Byju’s journey has been marked by significant challenges as it navigates a complex and evolving landscape in the edtech industry.
