Once hailed as the leading force in India’s Ed-tech realm, Byju’s championed by entrepreneur Raveendran now faces a profound crisis plunging from its former heights.
The transition from a $22 billion valuation to navigating through financial strains and corporate upheavals has been a journey fraught with severe challenges.
Raveendran’s journey finds a profound passion for learning and teaching, rooted in his childhood curiosity. Initially, employed as a service engineer at a shipping firm, his pivotal moment came during a visit to his hometown in Kerela in 2003. Assisting friends in cracking the MBA entrance exam, CAT, Raveendran discovered his innate forte for teaching. He aced the entrance exam with a perfect score.
He formally launched Byju’s classes for the CAT exam in the year 2006. Raveendran’s innovative teaching methods swiftly gained recognition in the Indian education tech space. His vision to make quality education accessible deeply resonated with 227 million students of the nation, where education for them stands as a top priority.
In the subsequent years, Raveendran emerged as the poster child of India’s burgeoning startup ecosystem. With a tagline urging students to “Fall in love with learning”, Byju’s became synonymous with innovation and accessibility in education.
Byju's soon ascended to its prominence, by initially reaching out to the undergraduate students. In 2011, the company expanded its offerings by forming Think and Learn Pvt Ltd.
The company then ventured into the school curriculum, breaking down chapters into interactive videos and using real-life examples to make students understand fundamental concepts, engaging students across the nation.
In 2015, the company launched Byju's learning app, which catered to students from kindergarten to class 12. The endorsement from Shah Rukh Khan In 2017 solidified its status, culminating in a valuation of over $1 billion by 2019 and securing sponsorship of the Indian cricket team. In the following year, Byju's became India's first ed-tech unicorn, a startup that was valued at over $1 billion. Later, BCCI announced Byju's as the Indian cricket team's new sponsor for 3 years.
However, the zenith of Byju's was short-lived, encountering many challenges. The rapid expansion during the COVID pandemic led to cash-flow problems and a dispute over a $1.2 billion loan. In 2021, BlackRock, the world’s largest asset manager reduced Byju’s estimated value to $1 billion, marking a decline of over 95% from its previous valuation.
In early 2022, Byju faced further valuation fluctuations as tech investor Prosus valued its stake at $2.112 billion. However, the year ended with the valuation at $1 billion, signalling instability within the Ed-tech giant.
The year 2023 proved to be chaotic for Byju. In March, Prosus slashed Byju’s valuation to $5.1 billion, sparking concerns and leading to layoffs. The online juggernaut roped in Lionel Messi as a global brand ambassador, attempting to bolster its image amid financial hardships. The downward spiral continued as Prosus marked down the fair value of its stake, intensifying the company’s troubles.
Byju’s faced allegations of financial mismanagement, including delayed financial reports and failure to pay employee benefits. Deloitte and three other board members resigned amidst a legal battle and investor scepticism over the company’s financial stability.
By November 2023, the gravity of Byju’s financial strain reached unprecedented levels, forcing the company’s founder to take drastic measures.
In a desperate bid to secure funds for employee salaries, Byju’s founder had to resort to mortgaging personal properties, including those owned by his family. This stark revelation plagued the startup further.
In October 2023, Byju’s faced yet another blow as it’s Chief Financial Officer(CFO), Ajay Goel tendered his resignation. Goel, who joined the EDtech giant in April of the same year, decided to return to the mining conglomerate Vedanta by the end of October.
Goel’s departure marked the latest setback for the startup, which was already struggling with numerous challenges.
Several factors contributed to Byju’s overall downfall. Employees alleged that Byju fosters a toxic work culture, characterised by abusive practices and unresolved grievances. Multiple videos have surfaced by employees, exacerbating internal tensions.
Aggressive Marketing tactics initially fuelled Byju’s rapid growth, straining the company’s financial resources. The company capitalized on the COVID pandemic to promote online learning, expanding its reach and acquiring numerous ed-tech startups.
Shareholders have further expressed discontent over the company’s performance, with some seeking the ouster of the founders from top leadership roles, including CEO Raveendran. This latest blow comes as investors express concerns over the company’s dwindling valuation, which has reportedly plunged between $3 billion and $1 billion.
In response, Byju has acknowledged the challenges it faces, that both the company and its employees are bearing the brunt of a standoff triggered by certain investors.
Currently, Byju’s is in the process of raising $200 million through a rights issue of shares.
The success of his capital raising effort will be crucial in determining the company’s ability to execute a successful turnaround and regain investor confidence.
As Byju navigates through this turbulence, the road to recovery remains uncertain, with the company facing mounting pressure to address internal issues and restore its once-stellar reputation in the ed tech industry.
Follow us
