What Went Wrong With Byju's, Which Was Once Valued At $22 Billion

Byju's revenue has remained steady, but its losses jumped from rs 252 crore to 4,564 crore in just a year..

What Went Wrong With Byju's, Which Was Once Valued At $22 Billion

Byju's is run by Byju Raveendran with his wife Divya Gokulnath.

Byju's, run by billionaire CEO Byju Raveendran , was the poster child of India's startup ecosystem and was expected to herald a change in pedagogy at schools and colleges. It reached a valuation of $22 billion in 2022 as its popularity rose by offering online and offline education courses. But in the last year, the company's popularity and valuation have seen a sharp decline with several of the its  investors now calling for leadership change at the ed-tech firm.

How Byju's Started

Byju Raveendran was happily working as a service engineer at a shipping firm. A visit to his hometown in Kerala in 2003, where he helped some friends crack the MBA entrance exam CAT, was when he first realised that he had a penchant for teaching. He appeared for the competitive exam and aced it with a perfect score.

He though rejected all MBA offers and returned to his job, only to score a 100 percentile in the exam again two years later. This led to several people approaching him to help them crack the exam.  The demand for his teaching skills grew rapidly, leading to the formal launch of Byju's classes for the CAT exam in 2006.

Meteoric Rise Of Byju's

Byju's soon expanded its reach to undergraduate students, eventually forming Think and Learn Pvt Ltd. in 2011. 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.

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In 2015, the company launched Byju's learning app, which catered to students from kindergarten to class 12. By 2019, Byju's had become India's first ed-tech unicorn, a startup that is valued at over $1 billion.

Byju's became the darling of India's startup ecosystem, captivating the nation with its innovative approach to education. The use of interactive videos and technology, coupled with celebrity endorsements from the likes of Shah Rukh Khan and Virat Kohli, propelled Byju's valuation to an unprecedented $22 billion, making it the world's most expensive ed-tech startup.

The meteoric rise of Byju's eventually gave way to a tumultuous fall. After a rapid expansion during the Covid pandemic, Byju's has been struggling with cash-flow problems and is embroiled in a dispute with creditors over a $1.2 billion loan.

The company's rapid expansion also led to allegations of a toxic work culture and immense pressure on employees to acquire more customers.

In June 2023, tech investor Prosus cut Byju's valuation by 75%, leading to layoffs and allegations of financial mismanagement. Byju's parent company, Think & Learn Pvt Ltd., faced scrutiny for not paying PF money to employees and was also suspended by Google and Facebook for non-payment of ad dues.

Reasons For Downfall

When the Covid pandemic hit, Byju's saw an opportunity to promote online and went all out with marketing. Their business boomed between Mar 2020 to Oct 2020. It acquired several ed-tech startups, not just in India but also in the US, as it tried to expand rapidly.

During COVID-19, the company sponsored the Indian cricket team, the Football World Cup, and even signed football star Lionel Messi as a global ambassador.

View this post on Instagram A post shared by Divya Gokulnath (@divyagokulnath)

But growth has slowed since classes resumed, and the company's challenges have been exacerbated by the months-long legal dispute that's only showing signs of intensifying.

Byju's revenue has remained steady, but its losses jumped from Rs 252 crore to 4,564 crore in just one year between 2019-20 and 2020-21.

Aggressive marketing tactics and financial mismanagement have also played a significant role in the company's downfall. Sponsorship of major events and celebrity endorsements strained its financial standings, leading to a $1.2 billion loan default in 2021.

The company's failure to file timely financial reports also raised questions about its stability. Byju's delayed the filing of its 2021/22 financial results by nearly a year, prompting auditor Deloitte and three board members to quit. Its chief financial officer and chief technology officer also quit in November 2023.

By November 2023, Byju's founder had to mortgage personal properties to secure a loan for employee salaries. The current valuation of $1 billion marks a drastic decline from its all-time high, signaling a troubling period for the once-thriving ed-tech giant.

What Next For Byju's?

The latest blow to Byju's comes in the form of shareholders moving a resolution seeking the ouster of the founders from top leadership roles, including CEO Byju Raveendran. Some of Byju's investors say the company's valuation has fallen to between $1 billion and $3 billion.

"The company and our employees are paying the price for a stand-off triggered by some investors," Byju's said.

Byju's, which is currently raising $200 million through a rights issue of shares , said such capital is "pivotal for a successful turnaround" and it has received support for the capital raising from multiple shareholders.

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The success of the ongoing capital-raising effort will likely play a pivotal role in determining the company's ability to execute a successful turnaround.

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Byju's crisis explained: Why edtech firm, once valued at $22 bn, is witnessing financial downfall

Ed-tech company byju's is in the midst of an intense financial crisis, with the positions of its top leadership and founders now threatened..

Ed-tech company Byju's has been grappling with a financial crisis, and in their latest move, the shareholders of the company have moved a resolution seeking the ouster of the founders from top leadership roles, including CEO Byju Raveendran.

Byju's continued to grapple with intense financial crisis.(Bloomberg)

The investors and CEO continue to be at a standoff as Byju's is currently facing a lawsuit in the United States disputing terms and payment of a loan. The company's valuation has taken a major hit, diminishing to nearly 10 percent of its all time high.

At its peak, Byju's was valued at $22 billion in March 2022, when online education demand was skyrocketing due to the Covid-19 pandemic. However, the company's valuation has fallen to between $1 billion and $3 billion, some of the investors of the firm said.

After layoffs of thousands of employees and constant payroll interruptions over the last year, here is all you need to know about the ongoing financial crisis in Byju's, and how top leadership is responding to it.

Read more: Byju's crisis: Investors seek ouster of founders, want to fire CEO Byju Raveendran

Byju's crisis explained.

Byju's valuation started to take a hit in 2023 when the demand for online education started to subside, especially with more competition in the industry. In April 2023, the ed-tech firm's struggle began when it came under the scanner of the Enforcement Directorate (ED), with three of its offices raided under provisions of the Foreign Exchange Management Act (FEMA).

ED slapped a FEMA violation notice on Byju's worth ₹ 9,362.35 crore. Legal troubles continued to mount for the ed-tech company after one of its foreign lenders ended up filing a lawsuit against Byju's in 2023.

US-based investment firm Redwood cut a loan of $1.2 billion to Byju's in November 2021, but the ed-tech firm failed to make a quarterly interest payment of ₹ 330 crore. After being faced with a lawsuit, Byju's further filed a case against Redwood for “accelerating its demand” to pay the loan.

Read more: Byju's US subsidiary files for bankruptcy in Delaware

This prompted several high profile exits from the company, including three of its board of directors - GV Ravi Shankar, Russell Dreisenstock and Vivian Wu. Deloitte, the financial auditor of the company, also resigned in 2023.

The year 2023 saw thousands of layoffs across all departments in Byju's and constant payroll interruptions as the company attempted to cut costs, sparking a backlash against founder and CEO Byju Raveendran.

In November 2023, a US court ruled in the favour of the lenders, saying that there was nothing wrong with consortium of lenders of Byju's appointing a director on a special purpose vehicle (SPV) that borrowed $1.2 billion, and removing Riju Raveendran, brother of the CEO, from the SPV's board.

With pressure from lender's mounting on Byju's, the company decided to further cut its valuation. Byju's is currently seeking to raise $200 million against a valuation of $250 million, as investor seek an ouster of founder Byju Raveendran from the board.

As many as six shareholders of Byju's parent company Think and Learn Private Limited moved the resolution to fire CEO Byju Raveendran. However, the company pushed back by saying that shareholders don't hold the authority to vote on CEO change.

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Posted Feb 23, 2024

At 8:06 PM UTC

Byju Raveendran is CEO of the company once described as India’s most valuable startup, but... maybe not anymore ?

Byju’s is an app-based educational company that’s snapped up US firms like Osmo (you might have seen its iPad-camera-attachment STEM games ) and Epic during its buying sprees.

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Byju’s has discussed shutting down WhiteHat Jr, but insists on continuity

what is byju's wikipedia

Byju’s is weighing whether to wind down WhiteHat Jr, a coding platform that it acquired over two years ago at an enterprise value of $300 million, as the edtech group looks to cut expenses and eliminate a business unit that has drawn considerable criticism to the firm.

The Bengaluru-headquartered firm, India’s most valuable startup at $22 billion valuation, has held conversations in recent weeks about shutting down what was once touted as one of its best acquisitions, three investor sources familiar with the matter told TechCrunch. It has not reached a decision yet, but is tilting toward continuing the business though with focus on organic growth, another person familiar with the matter said.

The discussions come at a time when Byju’s is cutting costs across the company. The firm, which has laid off thousands of employees and pared back on marketing expenses in recent quarters, was until recently spending about $14 million a month on the coding platform, one of the sources said. WhiteHat Jr is not independently profitable, sources said.

A Byju’s spokesperson said the company is “actively evaluating all our business units to ensure that they are aligned with our path to profitability,” but has no plans of shutting down WhiteHat Jr.

“At the group level, in accordance with its steadfast commitment towards achieving operational profitability, BYJU’S is constantly evaluating and optimizing its business operations towards global growth. As an ongoing activity, we are actively evaluating all our business units to ensure that they are aligned with our path to profitability,” a Byju’s spokesperson said in a statement after the publication of the story.

“Regarding the specific question on White Hat Junior, we have no plans of shutting it down. We are merely optimizing it for organic and efficient growth. We remain fully committed to delivering world-class educational experiences and solutions that empower students to achieve their full potential.”

Byju’s acquired WhiteHat Jr in 2020 at an enterprise value of $300 million. A considerable amount of the payout, however, was tied to future growth metrics, which meant that Byju’s eventually spent less than $235 million on the acquisition deal, said one of the aforementioned sources who, like others, requested anonymity discussing private matters.

The coding unit has drawn criticism from many for its misleading claims, quality of teaching and aggressive tactics to court students. WhiteHat Jr infamously also sued some of those critics , a move that attracted the firm even more backlash. It later withdrew the lawsuit. WhiteHat Jr founder Karan Bajaj (pictured above) left Byju’s a year after the acquisition, and according to one of the sources, has engaged with investors in recent weeks to explore raising a funding round for his new startup. He couldn’t be immediately reached for comment.

Byju’s — which counts Sequoia India, Lightspeed Venture Partners, Tiger Global, B Capital, UBS and General Atlantic among its backers — has spent the past year addressing many criticisms leveled at the firm. Byju’s said last month that its sales people no longer visited students’ homes to pitch to their parents and the firm now conducts a test to determine whether a kid’s parents can afford to subscribe to the service before signing them up.

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Byju's shareholders vote to oust CEO in meeting termed 'illegal' by edtech firm

Over 60 per cent of shareholders voted for removal of founder ceo byju raveendran and his family over alleged “mismanagement and failures”..

Listen to Story

Byju's shareholders file suit against Byju Raveendran, others over "mismanagement"

  • Over 60% Byju's shareholders vote for removal of CEO Byju Raveendran
  • Raveendran, family stay away from the meeting, call it “procedurally invalid”
  • Meeting's vote won't be applicable till court's ruling on March 13

Over 60 per cent of the shareholders of ed-tech firm Byju's cast their votes in favour of ousting founder CEO Byju Raveendran and his family from their positions, citing concerns over "mismanagement and failures" within what was previously regarded as one of India's most promising tech startups.

The company has contested the legitimacy of the vote, which occurred in the absence of its founders, labelling it as "invalid".

Prosus, a major investor among the six who initiated the call for the extraordinary general meeting (EGM), released a statement affirming that “shareholders unanimously passed all resolutions put forward for vote. These included a request for the resolution of the outstanding governance, financial mismanagement and compliance issues at Byju’s; the reconstitution of the board of directors, so that it is no longer controlled by the founder of T&L; and a change of leadership of the company.”

Raveendran and his family chose not to attend the EGM, dismissing it as "procedurally invalid."

Nonetheless, the decisions made during the EGM will remain on hold until March 13, awaiting the verdict of the Karnataka High Court on Raveendran's petition against the investor's decision to convene the EGM.

The court, on Wednesday, declined to halt the EGM, which was called upon by shareholders holding an aggregate stake of more than 32% in Think & Learn (T&L) – the parent entity of Byju's. However, it ruled that any resolutions passed would be suspended until the next hearing.

Owning a 26.3 per cent stake in the company, Raveendran and his family are significant shareholders.

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COMMENTS

  1. Byju's

    Byju's (stylised as BYJU'S) is an Indian multinational educational technology company, headquartered in Bangalore. [4] It was founded in 2011 by Byju Raveendran and Divya Gokulnath. As of January 2024, Byju's was valued at $200 million, a sharp fall from its peak of $22 billion in 2022. [5]

  2. BYJU'S Learning

    Born into a family of teachers in Azhikode, a small village in Southern India, Byju Raveendran is a teacher by choice, an engineer by training, and an entrepreneur by accident. Today, he and his team of educators and innovators are building one of the world's largest ed-tech companies, helping over 100 million students fall in love with learning.

  3. About Us

    Know about byjus application, how and when it started, what are the benefits etc here.

  4. The story of Byju's : one startup's journey of becoming an ed-tech

    Introduction The ed-tech unicorn Byju's was valued at $11 billion in 2020 and $5.75 billion in 2019. While the whole world was going through the pandemic and facing serious consequences, the nationwide lockdown accelerated the growth of online learning startups including Byju's, Unacademy, and Vedantu.

  5. Byju's: The unravelling of India's most valued start-up

    "Byju's is a company that has grown too fast too soon," says Shriram Subramanian, who heads an independent corporate governance research and advisory firm. Founded in 2011, Byju's launched its...

  6. Byju's and the other side of an edtech giant's dizzying rise

    Byju Raveendran is the founder of the edtech company. Byju's denied using aggressive sales tactics and said "only if the student and parent sees value in our product and develop trust do they ...

  7. How Byju Raveendran Built A $5.5 Billion Business With His ...

    Byju's $200 million in annual sales is still tiny compared to the $3.9 billion at Japan's Benesse Holdings, Asia's largest listed education company. Yet it's already profitable—earning ...

  8. Byju's and the other side of an edtech giant's dizzying rise

    Byju's said they have "different products at different price points based on customers' needs and affordability" and do not change prices in "the manner suggested". It also said sales executives ...

  9. Byju's Billionaire Founder Gets Court Relief In Fight Against Shareholders

    Byju's said the reason for the EGM were "merely a smokescreen designed to disrupt the management, control, and functioning of the company". AFP has reviewed a copy of the interim order.

  10. What Went Wrong With Byju's, Which Was Once Valued At $22 Billion

    New Delhi: Byju's, run by billionaire CEO Byju Raveendran, was the poster child of India's startup ecosystem and was expected to herald a change in pedagogy at schools and colleges. It reached...

  11. Explained: What is wrong with Indian ed-tech startup Byju's?

    Follow Us Story highlights Byju's claims that it is the world's largest education technology company. It offers courses in mathematics, physics and chemistry for school students and also offers courses on competitive examinations conducted in India. Byju's- a prominent Indian education technology startup- is facing a slew of problems.

  12. BYJU'S woes

    Byju's Alpha is a non-operative US entity, with no employees and no direct control over the operations of the edutech company, stated Byju's. They added that Byju's Alpha was set up solely ...

  13. Byju's crisis explained: Why edtech firm is witnessing financial

    Byju's valuation started to take a hit in 2023 when the demand for online education started to subside, especially with more competition in the industry. In April 2023, the ed-tech firm's struggle ...

  14. Byju's says $200M rights issue that cuts valuation by 99% fully

    Byju's says its recently launched $200 million rights issue has been fully subscribed, but the startup's founder urged some of its major investors to Byju's says its recently launched $200 million ...

  15. BYJU'S Owner

    A teacher by choice, an engineer by chance, and an entrepreneur by accident. Meet Byju Raveendran, the owner, founder, and CEO of BYJU'S - the world's leading edtech company. Born and raised in a small village in coastal Kerala, Byju attributes the lessons he has learned about teamwork, performing under pressure, leadership, etc to playing sports.

  16. BYJU'S Online learning Programs For K3, K10, K12, NEET, JEE, UPSC

    BYJU'S is India's largest ed-tech company and the creator of India's most loved school learning app. Launched in 2015, BYJU'S offers highly personalised and effective learning programs for classes 1 - 12 (K-12), and aspirants of competitive exams like JEE, IAS etc. With 50 million registered students and 3.5 million paid subscriptions, BYJU'S ...

  17. Byju's may no longer be Byju's after shareholders vote out Byju

    Byju's is an app-based educational company that's snapped up US firms like Osmo (you might have seen its iPad-camera-attachment STEM games) and Epic during its buying sprees.

  18. Byju's investors vote to remove founder

    A group of Byju's investors on Friday voted to remove the edtech group's founder and chief executive Byju Raveendran and separately filed an oppression By voting at an EGM, a group of Byju's ...

  19. BYJU'S Learning

    BYJU'S Learning - Explore all the online learning programs and courses that BYJU'S offers in the USA for students of all ages. Check out the Pre-K to Grade 12 curriculum for subjects like Math, Coding, Reading, Arts and Music!

  20. Byju's Investors Vote to Oust CEO from Troubled EdTech Startup

    Major Byju's shareholders including Prosus NV and Peak XV Partners voted Friday to oust its founder as chief executive officer, escalating a battle over the fate of the once high-flying online ...

  21. Byju's Shareholders Unanimously Vote For Removal Of CEO Byju Raveendran

    Byju's shareholders at extraordinary general meeting (EGM) have unanimously voted for removal of founder and CEO Byju Raveendran. Rahul MUpdated: Friday, February 23, 2024, 07:01 PM IST.

  22. 'CEO Byju Raveendran unfit to run firm': 4 Bjyu's investors file suit

    Four investors of Byju's have filed a suit against the edtech firm's founder Byju Raveendran and the top management at the National Company Law Tribunal in Bengaluru, reported news agency PTI. The investors have cited oppression, and mismanagement by Byju's CEO and the top management. They have asked the NCLT to declare Byju Raveendran ...

  23. Indian Edtech's Fallen Star Byju Raveendran Is No Longer A ...

    Byju's parent, Think & Learn, founded by Raveendran, a former math tutor, went on a fundraising spree in 2020-21, raising nearly $4.2 billion from a slew of investors including UBS and Abu Dhabi ...

  24. BYJU'S investors file oppression, mismanagement suit ...

    A group of four investors of BYJU'S has filed an oppression and mismanagement suit against the management of the company before the Bengaluru bench of the NCLT, seeking the declaration of founders ...

  25. Will investors vote to remove Byju's founder? All eyes on crucial EGM

    Allegations have surfaced against Byju's management for allegedly withholding crucial information from investors, exposing a growing divide between the company and some of its key stakeholders. These accusations include failure to disclose trading financials, material discrepancies between projected guidance and actual results, and inaccurate ...

  26. Byju's has discussed shutting down WhiteHat Jr, but insists on

    Byju's is weighing whether to wind down WhiteHat Jr, a coding platform that it at an enterprise value of $300 million, as the edtech group looks to cut expenses and eliminate a business unit ...

  27. Byju's shareholders vote for CEO Byju Raveendran's ouster, company

    Byju's in a statement, issued even before the EGM results were declared, said it "firmly declares that the resolutions passed during the recently concluded EGM — attended by a small cohort of select shareholders - are invalid and ineffective. The passing of the unenforceable resolutions challenges the rule of law at worst."