Byju’s, India’s edtech unicorn, has been making headlines lately, but not for the right reasons. National Company Law Court (NCLT) in Bengaluru has started bankruptcy proceedings against Mr. Byju owing 1.59 billion rupees ($19 million) owed to the Board of Control for Cricket in India (BCCI).
The debt was incurred for sponsoring the Indian team’s jerseys during international cricket matches. The court recognized the existence of the debt and Byju was unable to pay, which led to the appointment of an administrator to manage the company’s bankruptcy. “The existence of the debt and the default in the payment of the debt are clearly established,” the court said in its order.
The NCLT decision marks the latest setback for the troubled company. Reacting to the court’s order, a spokesperson of Byju’s said, “As we have always done, we want to reach an amicable settlement with BCCI and we are confident that, despite the order, a settlement can be reached.” The spokesperson added that the company’s lawyers are currently reviewing the order and will take necessary steps to protect Byju’s interests.
Founded in 2011 by Byju Raveendran, the company started as an offline tutoring service before pivoting to online learning. Byju became popular for its innovative approach to education, using technology to make learning more fun and accessible. In 2015, it launched a learning app. The company’s growth has been rapid, attracting significant investment from global venture capital firms and tech giants.
By 2018, Byju has become a unicorn, worth more than $1 billion. Success continues, with the company reaching a peak valuation of $22 billion by 2022, making it India’s most valuable startup. The Covid-19 pandemic initially slowed Byju’s growth as schools closed and online learning became essential.
However, the company’s rapid expansion and aggressive acquisition strategy began to show cracks. Byju made several high-profile acquisitions, including WhiteHat Jr for $300 million and Aakash Education Services for nearly $1 billion. The deal, while expanding Byju’s reach, also significantly increased debt and operational complexity.
Post-pandemic, as schools reopen and the edtech boom cools, Byju faces increasing challenges:
The debt was incurred for sponsoring the Indian team’s jerseys during international cricket matches. The court recognized the existence of the debt and Byju was unable to pay, which led to the appointment of an administrator to manage the company’s bankruptcy. “The existence of the debt and the default in the payment of the debt are clearly established,” the court said in its order.
The NCLT decision marks the latest setback for the troubled company. Reacting to the court’s order, a spokesperson of Byju’s said, “As we have always done, we want to reach an amicable settlement with BCCI and we are confident that, despite the order, a settlement can be reached.” The spokesperson added that the company’s lawyers are currently reviewing the order and will take necessary steps to protect Byju’s interests.
Founded in 2011 by Byju Raveendran, the company started as an offline tutoring service before pivoting to online learning. Byju became popular for its innovative approach to education, using technology to make learning more fun and accessible. In 2015, it launched a learning app. The company’s growth has been rapid, attracting significant investment from global venture capital firms and tech giants.
By 2018, Byju has become a unicorn, worth more than $1 billion. Success continues, with the company reaching a peak valuation of $22 billion by 2022, making it India’s most valuable startup. The Covid-19 pandemic initially slowed Byju’s growth as schools closed and online learning became essential.
However, the company’s rapid expansion and aggressive acquisition strategy began to show cracks. Byju made several high-profile acquisitions, including WhiteHat Jr for $300 million and Aakash Education Services for nearly $1 billion. The deal, while expanding Byju’s reach, also significantly increased debt and operational complexity.
Post-pandemic, as schools reopen and the edtech boom cools, Byju faces increasing challenges:
- Financial irregularities: Companies delay filing financial results, raising concerns about accounting practices.
- Funding crunch: Despite its high valuation, Byju is struggling to raise new funds, with investors becoming wary of its financial health. Major investors like Prosus and Peak XV Partners left Byju’s board due to disagreements with Byju founder Raveendran over business processes and internal controls.
- Regulatory scrutiny: Indian authorities have begun investigating the company’s operations and fundraising methods.
- Layoffs and cost cutting: Byju implemented significant staff reductions and office closures to reduce costs.
- Debt problems: The company is facing difficulties in paying its debts, including a $1.2 billion term loan.
- Devaluation: Some investors cut the value of Byju drastically, with reports of up to 90% devaluation.
- Leadership Exodus: Several top executives are leaving the company, further damaging investor confidence.
The situation worsened in 2023 when Byju’s auditor, Deloitte, resigned, due to the delay in financial reporting. This event, coupled with ongoing financial struggles, pushed the company to the brink of insolvency.
“Raveendran seems to have wasted a huge opportunity … Will Byju have a less glamorous but more stable path as a non-profit organization like Khan Academy? growth through the social relevance of Learning applications is a trap,” wrote Andy Mukherjee in a Bloomberg opinion.
(With input from agencies)
