Byju's worth zero now: How the cookie crumbled for India's edtech giant

Byju Raveendran, founder and chief executive of crisis-hit edtech firm Byju's, said the company, once valued at $22 billion, has seen its valuation plummet to zero

Byju’s, once hailed as India’s most valuable startup, has experienced a swift reversal of fortune following a meteoric rise marked by challenges. The simultaneous resignation of three key investors — Prosus, Peak XV Partners, and the Chan Zuckerberg Initiative — from its board in 2023 was a significant blow, leaving the troubled company in a near-impossible position to raise funds.

Founder Byju Raveendran, during a virtual press conference on Thursday, revealed that the company’s worth had effectively plummeted to zero.

These resignations, which followed the Delaware court’s ruling on a default claim by US lenders, exacerbated the firm’s struggles. “When the US lenders called a default and filed in the Delaware court, within two weeks, all three directors resigned. Those three board members resigning together is what made it almost impossible for us to do any more fundraising or equity raising. Even if they wanted to resign, if a transition or a vote for reconstitution had been planned, the company wouldn’t be in the situation it is today,” Raveendran lamented.

As the situation unfolded, investors such as Prosus wrote off their stakes in Byju’s, further underscoring the dramatic downfall of the edtech decacorn. Raveendran also alluded to the investors’ financial priorities, accusing them of abandoning the company at the first sign of trouble.

 

Journey to fame: Byju before Byju’s
 

Byju Raveendran’s journey began long before the creation of Byju’s. In 2010, Raveendran, a self-taught teacher and learner as he likes to call himself, was renowned for his Common Admission Test (CAT) coaching sessions. His classes in Bengaluru, initially held in local colleges, were soon attended by thousands, prompting him to shift to stadiums and auditoriums to accommodate the growing demand.

Raveendran’s success in topping the CAT twice between 2005 and 2007 positioned him as an educational force. Although he was offered places at prestigious Indian Institutes of Management (IIMs), he chose instead to pursue his passion for teaching, founding Think & Learn Pvt Ltd in 2011. His classes became a sensation in southern India, with a focus on results-driven teaching that attracted a massive following.

In 2013, Raveendran’s journey took a pivotal turn when Ranjan Pai, chairman of the Manipal Group, and Mohandas Pai, former Infosys CFO, invested in his fledgling company, marking the start of Byju's rapid ascent.

The meteoric rise of Byju’s
 

After securing the initial investment, Byju’s quickly turned from offline to online education. In 2015, the company launched its first mobile app, capitalising on the growing popularity of digital learning. By 2016, it had attracted a $145 million investment, followed by another $70 million in 2017.

Armed with significant capital, Byju’s embarked on an aggressive expansion, employing a massive workforce and launching nationwide advertising campaigns. The startup, backed by household names like Shah Rukh Khan and Mohanlal, became a household name itself.

By 2019, the startup had evolved into an education empire with over 50,000 employees and a global presence. Its revenue surged, becoming the first edtech firm in India to surpass the Rs 1,000 crore mark. Yet, even as Byju’s was celebrated as a success story, cracks began to emerge. The company’s aggressive sales culture drew criticism for pressuring parents into purchasing expensive courses and devices.

 

Covid pandemic boom and the start of the fall
 

The Covid-19 pandemic was a boon for the edtech sector. With schools and universities closed, millions of students turned to online platforms, and Byju’s thrived. Between 2019 and 2020, the company raised over $1 billion, riding a wave of investor enthusiasm and soaring valuations. Byju’s rapidly expanded its product portfolio and geographical reach, becoming a global leader in edtech.

However, as the pandemic’s impact waned, so did Byju’s momentum. Its rapid growth, fuelled by acquisitions of 17 companies between 2017 and 2021, began to show signs of strain. While the acquisitions aimed to diversify the company’s offerings, many turned out to be burdens rather than assets. WhiteHat Jr, a $300 million acquisition in 2020, failed to deliver on its promise, and the company’s high-pressure sales tactics came under scrutiny.

In 2021, the company faced another setback when it had to re-recognise past revenues, resulting in increased losses and lower-than-expected earnings. As concerns mounted about Byju’s aggressive accounting practices, the company’s former auditor refused to sign off on the FY22 financial results.

 

Byju’s becomes a marketing juggernaut
 

Despite internal issues, Byju’s continued its extravagant marketing spending. In 2019, the company became the main sponsor of the Indian cricket team, paying Rs 4.61 crore per bilateral match and Rs 1.51 crore per match in ICC events. The company also spent millions on international endorsements, including a $40 million deal to sponsor the 2022 FIFA World Cup and a multi-million-dollar contract with football superstar Lionel Messi.

However, these flashy deals did little to assuage the growing discontent among employees and customers. The lavish spending came at a time when Byju’s laid off thousands of workers, sparking widespread outrage. 

The beginning of the end

By late 2022, it became apparent that Byju’s was facing serious challenges. Parents and students questioned the quality of its courses, while complaints about the company’s aggressive sales tactics and alleged predatory lending practices mounted. In Parliament, questions were also raised about company’s treatment of its customers, particularly those from lower-income backgrounds.
 

Many of the company’s acquisitions failed to deliver as expected. WhiteHat Jr, in particular, struggled to maintain its relevance post-pandemic. Even the high-profile $1 billion acquisition of Aakash Educational Services, a leading offline coaching firm, fell short of investor expectations. Aakash and Great Learning, two of Byju’s most successful subsidiaries, have since distanced themselves from the parent company.

Byju’s: A tumbling empire

Today, Byju’s stands at a crossroads. Once a symbol of India’s startup success, the company now faces a litany of legal and financial troubles. Its tuition centres are being shut down, and creditors are calling for the dissolution of US-based subsidiaries Osmo and EPIC to repay debts.

Yet, Raveendran remains optimistic. In a recent email to employees, he expressed confidence in Byju’s 3.0, a new initiative to introduce an artificial intelligence-driven, hyper-personalised educational platform. However, industry experts and former investors remain sceptical about the company’s future.

As one former investor noted, “Byju’s had the potential to revolutionise education, but reckless business planning and overambition led to its downfall. It remains to be seen if Raveendran can pull off a miracle and save the company.”

For now, Byju’s future remains uncertain, as it navigates the challenges of turning around an empire that once seemed too big to fail.