This is the first of the three parts of the blog on this topic. This first section briefly narrates the events that unfolded during the two decade Byju’s saga. This is to prompt the readers to raise questions and arrive at answers there on.

Let’s begin:

Have a look at the milestones in the meteoric rise and even the faster down slide of a start up in the edtech (education + technology) segment.

Let’s commence from the commencement.

2006 Byju Raveendran, commenced tutoring his peers for CAT, the esteemed entrance examination for IIMs. The remarkable success of his students propelled him to nationwide recognition.

2013 secured seed funding from Aarin Capital, followed by investments from Sequoia Capital India, Chan Zuckerberg Initiative (CZI), Tencent, Sofina, Lightspeed Venture Partners, Qatar Investment Authority, Verlinvest, IFC, Naspers Ventures, CPPIB, and General Atlantic.

2017 acquired TutorVista from Pearson, Osmo, an American educational game maker (2019), WhiteHat Jr, and LabInApp (2020), Scholr  and Aakash (2021)

Byju’s signed Messi as its global brand ambassador in November 2022 for three years for an ‘education for all’ campaign as part of its social impact arm. But was discontinued after a year.

2022 Financial year’s accounts were not filed until late 2023 and it was found to be the worst for the enterprise

2023 Byju’s faced investigations over foreign exchange violations In June, Deloitte resigned as Byju’s statutory auditor.

2024 January  US-based lenders initiated bankruptcy proceedings against Byju’s to recoup loans. The company issued the right shares, facing opposition from shareholders. In February  Enforcement Directorate (ED) launched an investigation. Byju’s shareholders, including Prosus NV and Peak XV Partners, voted to remove Mr. Raveendran as CEO. This is being challenged by Raveendran in a court of law. In March The Institute of Chartered Accountants of India found gross negligence in accounting practices by auditors of Byju’s and accordingly recommended to the Financial Reporting Review Board (FRRB) to take punitive actions. In April Forbes billionaire index plugged his net worth to zero, and he is one of the four dropped from the billionaires’ list. Lays off 500 staffers, closes down its multiple offices and tuition centres, not able to pay salaries to its employees.

Byju Raveendran persists in his battle, despite setbacks. His court hearing regarding his removal as CEO is slated for June.

July 2024: On 15 July 2024, NCLT admitted an insolvency petition by BCCI. That means insolvency proceedings on Byju’s will start immediately.

BYJU’S A CASE STUDY: Byju’s serves as a compelling case study. Initially spotlighted by Harvard Business School in 2019 during its ascent, it now offers a richer analysis as it faces challenges. Readers are encouraged to discern their own insights from this narrative.

I draw your attention to the valuation of Byju’s. Consider the trajectory of its valuation from 2014 to 2024: starting at $29.9 million, peaking at $22 billion in 2022, the same year Byju’s reported losses exceeding $1 billion. This valuation appears disconnected from reality. This emphasizes that the valuation reflects future expectations rather than current performance.

A glance at Byju’s investors list, prominently featuring Mark Zuckerberg, Facebook’s founder, who made his first investment in Asia, raises the question: Was the investment driven by valuation, or was the valuation based on the investors? The inflated 2022 valuation was subsequently corrected within two years, aligning closer with actual performance.

Yet, the overarching questions persist: can the current method of valuation of startups be relied upon? How accurately can startups be valued?

To read Part 2, Indian cricket team sponsors’ Curse, click here

To read part 3, Lesson from Apple and Google for Byju’s click here