In April, ed-tech startup Byju’s founder, Byju Raveendran, faced emotional distress as a probe agency raided the company’s Bengaluru offices, implicating it in potential foreign exchange violations. Raveendran, based in Dubai, passionately defended the company during calls with investors as a planned $1 billion equity fundraise from Middle Eastern investors hung in limbo.
Byju’s once high-flying status in the tutoring startup arena was shaken by a series of crises. These included delays in filing financial accounts, skipping interest payments on loans, and legal disputes with creditors. US-based investors even accused the company of concealing half a billion dollars, leading to lawsuits.
Investor Prosus NV recently expressed concerns about Byju’s reporting and governance, highlighting the company’s disregard for advice and recommendations. This year, Prosus slashed Byju’s valuation from $22 billion to $5.1 billion.
Byju’s remarkable journey from a small tutoring venture to a $22 billion ed-tech powerhouse attracted global investors, including Sequoia Capital, Blackstone Inc., and Mark Zuckerberg’s foundation. During the pandemic, the company solidified its position in the ed-tech market with widespread adoption.
However, as classrooms reopened, doubts arose about Byju’s financial management. Investors questioned the delay in hiring a chief financial officer and the rapid acquisition of companies worldwide. Internal challenges emerged with numerous employee departures, board resignations, and underutilized teaching centers.
Critics attributed some missteps to Raveendran’s inexperience and excessive enthusiasm, accusing him of withholding financial information and inadequate audits.
Raveendran’s inspiring journey from a small village in Kerala to leading a multi-billion-dollar enterprise impressed many. Byju Raveendran co-founded Byju with Divya Gokulnath, and the company flourished with its self-learning app and unique teaching methods.
Despite investor support, the company faced challenges in 2022, with doubts raised about business decisions and financial transparency. Byju’s financial accounts for the fiscal year ending March 2021 were delayed, and audited statements later revealed significant losses.
The company’s financial troubles alarmed investors, leading to offloaded holdings by some creditors like Blackstone. Prominent representatives from investors like Peak XV, Prosus, and the Chan Zuckerberg Initiative resigned from the board. Byju’s also skipped an interest payment and filed a lawsuit in New York against lenders.
While the steering committee of lenders recently agreed to amend a $1.2 billion term loan by August 3, 2023, Byju’s faces a challenging road to recovery. Despite this, many investors remain optimistic, citing the company’s strong assets, including a vast customer base of 150 million. However, Byju’s will need to navigate carefully to regain stability and overcome the recent setbacks.
