Charting Byju’s 99% fall in valuation

When it rains, it pours, and Byju’s is soaking in bad news.

Once India’s most valuable startup and an edtech trailblazer, the company has faced a turbulent last couple of years.

At its peak in March 2022, the firm was valued at US$22 billion. But in January, when it’s parent company Think and Learn announced that it would be seeking to raise US$200 million via a rights issue, the fundraise was valued at US$230 million, which would be a 99% plunge.

As the chart above shows, Byju’s witnessed a 44x rise in its valuation over a span of four years, only to see its value nosedive within about two years after it hit its peak.

The company’s rise to the top benefited from a pandemic-fueled boost in online learning. Its fall appears to have been sparked by a multitude of reasons.

It began in May 2022 when short-seller Fraser Perring put a short position on the edtech firm’s top investor Sofina Group, stating that Byju’s was “overvalued” and “unsound.”

Investors in the Indian company began to question its valuation, with both majority investor Prosus and minority investor Blackrock drastically marking down their stakes in the firm.

Byju’s also faced allegations that two of the investments that it received around the time it was valued at US$22 billion were fake.

What rocked investors’ faith in the firm even further was that its revenue growth for the financial year ending March 2021 – the reporting of which was delayed by over 18 months – was 40% lower than what the firm had projected. Losses had also widened significantly.

In June 2022, Byju’s laid off more than 2,500 employees to cut costs and also delayed its payments for the Aakash Education acquisition deal.

This month, the company’s backers called for a change in leadership, citing governance, financial mismanagement, and compliance issues at the company.

Think & Learn has responded stating that the shareholder’s agreement does not give the investors the right to vote on CEO or management change. It said the proposed rights issue is on track and has received “encouraging responses from multiple investors.”

The heady days of a US$22 billion valuation must seem a long time ago for founder and CEO Byju Raveendran.

Credits

Graphic: Peter Cowan