Bengaluru: In a recent setback for Byju’s, the edtech giant’s valuation has plummeted to under $3 billion, marking an 86% decrease from its peak valuation of $22 billion just a year ago. This comes as the company faces significant challenges, including cash-flow problems and a dispute with creditors over a $1.2 billion loan.
The disclosure of this latest valuation cut was made by interim CEO Ervin Tu during a Prosus earnings call. Byju’s has witnessed a series of valuation reductions over the past year, with shareholders like Prosus and Blackrock progressively lowering it to $11 billion in March, $8 billion in May, and $5 billion in June.
The company’s financial woes were further highlighted when it reported a staggering ₹2,250 crore loss, and its 2021/22 financial results were delayed by almost a year, leading to resignations from key figures, including auditor Deloitte and three board members. The chief financial officer and chief technology officer also resigned last week.
This downward spiral for Byju’s, once considered a shining star in India’s startup landscape, is indicative of its struggles to recover from the challenges posed by the post-Covid era. The company had aggressively expanded during the pandemic, acquiring several edtech startups in both India and the US.
However, as schools and universities reopened, the growth slowed, exacerbating Byju’s financial difficulties. The ongoing legal dispute with creditors over the $1.2 billion loan has further strained the company’s resources and reputation.
Prosus did not provide a specific reason for the recent valuation cut, but in July, it had expressed concerns about Byju’s management, stating that the company’s leadership “regularly disregarded advice.” This adds to the mounting pressures on Byju’s founder, Byju Raveendran, who had once been celebrated for steering the company to its status as India’s most valuable tech startup.
Once the official sponsor of the Indian cricket team, Byju’s has now found itself entangled in legal issues with the Board of Control for Cricket in India (BCCI). The cricket governing body filed a case against Byju’s parent company over a missed payment of sponsorship royalties, amounting to about $20 million.
This recent development underscores the challenges faced by Byju’s in navigating financial hurdles, legal disputes, and a tarnished public image. The company, which experienced rapid growth during the pandemic, is now grappling with the complexities of sustaining its position in the highly competitive edtech market.
As Byju’s seeks to regain its footing, the future remains uncertain, and its struggles serve as a cautionary tale in the dynamic landscape of India’s startup ecosystem.