India’s famous Edtech platform Byju’s struggling to survive

Byju’s, one of the most valued edtech start-ups in the world, has experienced a significant downturn in its fortunes following operational and financial challenges in recent months. 

Once regarded as a prominent player in the education technology sector and enjoying widespread investor support during the COVID-19 pandemic, the company's struggles signify a notable correction in the upward trajectory of Indian startups.

According to a BBC report, the company which was valued at $22bn (£17.38bn) has a current valuation of $1bn. Investment company BlackRock, known for its thorough assessments of company valuations, has drastically reduced Byju's valuation to $1 billion.

The company is now regarded by some as a cautionary tale for domestic start-ups, as investment company BlackRock recently slashed its valuation to $1bn, the report dated March 11 said.

On February 23, many shareholders in Byju's parent company, Think & Learn (T&L), voted to remove Mr. Raveendran as CEO during a special meeting. They accused him of mismanagement and failure. 

However, Mr Raveendran and his family deny these claims. They argue that the vote was not valid because it violated company laws requiring at least one founder-director to be present at the meeting. Mr Raveendran called the meeting a "farce" and is challenging it in court. 

The Karnataka High Court has temporarily stopped the resolutions passed at the meeting until it reviews the case on March 13.

In March 2024, four investors of embattled Byju's filed their caveats in the Supreme Court, requesting to be heard before any order is passed on any petition likely to be filed against a National Company Law Tribunal order that allowed edtech firm to go ahead with its $200 million rights issue.

Prosus, Sofina SA, Peak XV Partners Investments, and General Atlantic Singapore TL Pte Ltd have filed separate caveats in the SC on March 4, reported the Economic Times.

These events are the latest in a series of legal and financial problems that Byju's has been dealing with recently. In the past year, the company has faced debt, unhappy investors, lawsuits, investigations, layoffs, delayed salaries, and a shortage of cash.

In January, after repeated missed deadlines, T&L reported a total loss of 82.3bn rupees ($1bn, 792.3m) for 2022. The company is yet to present its audited financials for 2023, missing the December deadline it had set last year. It has yet to share its financials for 2023.

Byju's spent billion on acquisitions of other edtech companies in 2021, like Aakash, Toppr et al but its valuation has since declined. To address cash flow problems, Byju's proposed a rights issue to raise funds, which some investors have opposed. 

Byju’s, which was founded in 2011 as an online tutoring firm, initially focused on classes for schoolchildren and competitive exam preparation in India. It later branched into introducing learning apps in various Indian languages. 

A significant portion of Byju's revenue came from the sale of hardware such as tablets, SD cards, and laptops hosting its educational content, reported the BBC.

An investigative report published by Context, a news and analysis reporting platform by Thomson Reuters Foundation, in 2022 revealed that the edtech giant had an “abusive and exploitative work environment” and “unscrupulous sales practices that involve profiling, pursuing and pressuring potential customers from poorer backgrounds to buy its courses.”

The report by Context said it talked to 26 salespeople including 18 current employees and eight former ones, who said that the working conditions are harsh with “excessive hours, incidents of physical and verbal abuse, and a culture in which they are encouraged to mislead clients to make sales by almost any means.”