Manya Rathore
Research expert covering India
Byju's - statistics and facts
Aided by Covid tailwinds, India’s ed-tech sector emerged as an excellent example of turning adversity into opportunity. While the pandemic brought educational institutions to a screeching halt, it fast-tracked the adoption of online education. Capitalizing on the demand for virtual education, Bengaluru-based Byju’s emerged as a global key player in the ed-tech sector with a whopping 22 billion U.S. dollars valuation in October 2022. Co-founded by Byju Raveendran and his wife Divya Gokulnath, Byju’s parent company, Think and Learn was established in 2011, and four years later Byju’s learning app was rolled out.
However, the ultimate boom came during the pandemic when its revenue increased exponentially. This was followed by a phase of aggressive acquisitions in 2021 with big-ticket buyouts like Aakash, Toppr, and Epic at a high valuation. It soon surpassed the digital payments platform Paytm to become India’s most-valued startup. It is estimated to have allocated substantial sums towards signing famous names like Bollywood actor, Shah Rukh and football player, Lionel Messi as their brand ambassador. The start-up was also an official sponsor of the FIFA World Cup in Qatar and the main sponsor of the Indian National Cricket team.
In addition to financial woes, Byju’s aggressive promotions and marketing have been widely criticized as the company stands accused of mis-selling its offerings to parents who couldn’t afford them. Meanwhile, three key investors and five top-level executives have exited the startup. Moreover, the startup is under government scrutiny for lapses in corporate governance. It laid off thousands of its employees since last year, however, the final settlement dues have been delayed until November 2023.
As the company undergoes business restructuring, legal troubles with its creditors, and challenges in securing fresh capital, the start-up is targeting the IPO of its test-prep arm Aakash Educational Services in 2024. The course of the next months will be decisive for Byju’s with implications extending beyond the company. Once the trailblazer of the Indian ed-tech ecosystem and occupying almost half a share of the ed-tech sector in India, Byju’s future now remains uncertain.
Byju’s explosive growth
With an estimated 150 million users, Byju’s revolutionized learning with its interactive programs. The start-up’s core offerings include K-12 (Kindergarten to 12th grade), tuition, and test prep. It later added coding, job skills, and lifelong education to its portfolio. The company secured a solid safety net of marquee global investors such as Sequoia Capital, Prosus, Chan-Zuckerberg Initiative, BlackRock, and others.However, the ultimate boom came during the pandemic when its revenue increased exponentially. This was followed by a phase of aggressive acquisitions in 2021 with big-ticket buyouts like Aakash, Toppr, and Epic at a high valuation. It soon surpassed the digital payments platform Paytm to become India’s most-valued startup. It is estimated to have allocated substantial sums towards signing famous names like Bollywood actor, Shah Rukh and football player, Lionel Messi as their brand ambassador. The start-up was also an official sponsor of the FIFA World Cup in Qatar and the main sponsor of the Indian National Cricket team.
Bursting the bubble?
Troubles first surfaced when Byju’s delayed filing its financials for 2022. Critics questioned its sky-high valuation (on which it raised two funding rounds). This was followed by its non-promoter investors lowering the valuations significantly in the months following October 2022. The company procured a 1.2 billion U.S. dollar loan from overseas investors in 2021 to fund its acquisitions at a time when interest rates were favorable. However, the subsequent rise in interest rates has rendered the debt more expensive. Two of its acquisitions: Great Learning and Epic, are now on sale for the term loan repayment.In addition to financial woes, Byju’s aggressive promotions and marketing have been widely criticized as the company stands accused of mis-selling its offerings to parents who couldn’t afford them. Meanwhile, three key investors and five top-level executives have exited the startup. Moreover, the startup is under government scrutiny for lapses in corporate governance. It laid off thousands of its employees since last year, however, the final settlement dues have been delayed until November 2023.
As the company undergoes business restructuring, legal troubles with its creditors, and challenges in securing fresh capital, the start-up is targeting the IPO of its test-prep arm Aakash Educational Services in 2024. The course of the next months will be decisive for Byju’s with implications extending beyond the company. Once the trailblazer of the Indian ed-tech ecosystem and occupying almost half a share of the ed-tech sector in India, Byju’s future now remains uncertain.
Manya Rathore
,
Mar 15, 2024
Manya Rathore
Research expert covering India
