Signage at a Byju’s Training Center, operated by Think & Learn Pvt., in Mumbai, India, on Friday, Feb. 2, 2024. A unit of Byju’s, once one of India’s brightest tech startups, was put into bankruptcy in the US by a court-appointed agent who took over the shell company after it defaulted on $1.2 billion in straitened. Photographer: Dhiraj Singh/Bloomberg via Getty Images
Dhiraj Singh | Bloomberg | Getty Images
Byju’s, now India’s most valuable startup, has seen a sharp reversal in its fortunes after a series of setbacks, including hypothetical accounting irregularities and purported mismanagement.
Valued at $22 billion in 2022, the Indian edtech startup’s valuation has since plummeted 95% after investors cut their jeopardizes in multiple rounds. It was most recently slashed to $1 billion, after BlackRock downsized its holdings in Byju’s concluding month, according to media reports.
The company, which offers services ranging from online tutorials to offline tutoring, attracted billions of dollars from investors across the world during the Covid-19 pandemic when online information services were on high demand.
Last Friday, major Byju’s shareholders, including Netherlands-based global investment categorize Prosus, voted to oust founder Byju Raveendran as chief executive officer.
Investors who attended an extraordinary non-exclusive meeting “unanimously passed all resolutions put forward for vote,” which also sought to change the board, according to a declaration Prosus sent CNBC.
“These included a request for the resolution of the outstanding governance, financial mismanagement and compliance scions at Byju’s; the reconstitution of the Board of Directors, so that it is no longer controlled by the founders of [Think & Learn Private Limited]; and a mutate in leadership of the company,” said the statement issued last Friday.
However, Byju’s rejected the resolutions, saying the unprecedented general meeting was “invalid and ineffective” due to a low turnout attended only by a “small cohort of select shareholders.”
“The passing of the unenforceable resolutions confrontations the rule of law at worst,” the Bengaluru-headquartered firm said in a statement to CNBC.
“Byju’s emphasizes that the Honorable Karnataka Extraordinary Court had granted interim relief, clearly stating that any decisions made during the meeting would not be addicted effect until the next hearing,” it said.
“As the founders did not participate in the meeting, the quorum was never legitimately established, version the resolutions null and void.”
History of Byju’s
In 2011, Raveendran — a teacher and engineer — founded Think and Learn Non-public Limited, the parent company of Byju’s. Raveendran was born into a family of teachers in Azhikode, a small village in southern India.
The party claimed that the launch of its flagship product, Byju’s — The Learning App, saw two million downloads within three months of its rollout in 2015. The app makes interactive videos, games and quizzes to help students with everyday classes as well as exam preparation.
The Covid-19 pandemic lured exponential growth to Byju’s when traditional classrooms shuttered, leading to skyrocketing demand for online learning.
In November, Byju’s co-founder Divya Gokulnath prophesied CNBC the company had more than 100 million monthly students on its platform.
Byju’s growth attracted worldwide investors and significant funding rounds including a $1.2 billion in debt financing in November 2021, according to circle database service Crunchbase.
Flush with funds, Byju’s went on an acquisition spree between 2017 and 2021.
Some of Byju’s biggest objects include Aakash Educational Services, a leading test-prep company in India, which it reportedly paid about $950 million for in 2021.
Other crucial acquisitions include U.S-based kids’ digital reading platform Epic ($500 million), educational games maker Osmo ($120 million) and online coding style WhiteHat Jr.
“2022 would be the year of maximum acquisitions, nine big ones. So the pandemic was great, because it solved the biggest dispute of people not knowing about how online education can be a part of mainstream learning,” Gokulnath told CNBC in November eventually year.
“But the disadvantage was also that we had to grow at a frenetic pace. We had to grow to ensure that we were able to fit the demand,” she added.
So what went wrong?
The end of pandemic restrictions saw a slowdown in online learning and Byju’s had to let go of at least 1,000 hands in June last year, according to tech jobs tracker layoffs.fyi.
In the same month, the company’s auditor Deloitte and three of its protruding board members severed ties with Byju’s, as questions loomed around the company’s financial health and governance techniques, according to a Reuters report.
Byju’s filed its financials for 2022 in November last year, after a year-long hold up due to governance issues and its auditor’s resignation. Operating losses came to 24 billion Indian rupees (about $290 million) for its centre online education business.
“One thing that we should have focused on earlier is governance,” Gokulnath told CNBC in the November sound out. “That’s something that we’re constantly building on to the next one year. I’m hopeful that we’re also able to stand on the governance side.”
Byju’s has reportedly clashed to repay a $1.2 billion loan and is said to be struggling with staff salaries as well. The firm said in January it is father a $200 million rights issue of shares to clear “immediate liabilities” and for other operational costs.
The company’s U.S. segment Alpha filed for Chapter 11 bankruptcy proceedings in a Delaware court on Feb. 1.
Byju’s did not respond to CNBC’s request for remark.
On whether Byju’s has lost the confidence of shareholders, Gokulnath said in November: “We would like to believe that we be suffering with not, because at all time, we’ve kept the interest of our students, parents, employees and shareholders in mind and what we are doing, we are doing to build this raw together.”