Byju Raveendran, Founder & CEO of the edtech unicorn– Byju’s, had a vision. He envisioned a world where education was not bound by classroom walls but accessible to anyone with a smartphone. And thus, Byju’s – The Learning App was born.
We bring you a journey of triumphs, unprecedented highs, fall from the limelight, and more within a few years. Let’s begin with a trip down memory lane and meander to the story of what happened with Byju’s…
The Rise of the EdTech Unicorn
The Idea of Byju’s is Born
Byju’s humble beginnings can be traced back to Raveendran’s days as a college coach in Bengaluru.
He could simplify complex subjects, making his classes wildly popular.
Soon, he taught thousands in a sports stadium, projecting lessons on giant screens. Raveendran’s teaching methods stood out in a country with scarce quality instructors.
Floats Think and Learn Pvt Ltd
Recognizing the potential of his teaching approach, Raveendran recruited his brightest students to join him. He opened 41 coaching centers and, in 2011, officially registered his venture as “Think and Learn Pvt Ltd., the parent company of Byju.”
Launches Self-learning App
In 2015, Byju launched a self-learning app primarily focused on math, science, and English for primary school students.
The app’s engaging video lessons simplified complex concepts, making it immensely popular. Byju’s was no longer just a platform but a revolution.
The company’s rapid growth attracted substantial funding, with global giants like Tencent and the Chan Zuckerberg Initiative investing heavily. Sequoia Capital, an early supporter, joined in 2015 with a $58 million investment
Byju’s understood the art of monetizing education. They offered free content to lure users and enticed them with subscription plans.
With millions of users subscribing, Byju’s revenues skyrocketed. They also acquired competitors like Toppr and WhiteHat Jr. Aakash, further solidifying their position.
The Pandemic Boost
When the COVID-19 pandemic hit, Byju’s was ready. With schools shut down and students stuck at home, the demand for online education surged.
Byju’s cashed in, reporting exponential user numbers and revenue growth during this period.
The Beginning of Decline
What went wrong? You ask.
We’ll tell you
Byju’s had its share of troubles. As it grew, concerns arose.
Byju began diverting from its core mission of providing quality education, instead focusing on selling hardware devices such as tablets and laptops to students and parents.
The free content that once defined Byju’s now was vanishing.
Byju’s aggressive marketing strategies faced backlash, with allegations of misleading ads and aggressive sales tactics.
Public perception shifted, tarnishing the once-shining brand. Critics questioned the quality of the content and the pressure placed on students to enroll in costly courses.
Waning Business Prospects
As the pandemic waned and students returned to physical classrooms, Byju’s was shaky.
The rapid adoption of online learning in India was less enduring than anticipated because of cultural preferences for traditional classroom-based education, the digital divide, and limited internet access in many areas.
Dr. Usha Batra, an academic researcher, remarked on Byju’s approach, saying, “What Byju’s did was to use technology as a replacement, rather than a complementary, tool to learning. While selling expensive courses to children, the company overlooked digital disparity, affordability, and literacy.”
Indian authorities began scrutinizing the edtech industry closely, imposing restrictions on certain practices.
Queries about the firm’s financial accounts for the fiscal year ending in March 2021 raised concerns, and the enforcement directorate even issued summons to company officials.
Eighteen months following the end of the financial year, Byju revealed its audited statements, projected losses of 45.7 billion rupees, marking a significant 13-fold increase compared to the previous year.
Facing Fierce Competition
The ed-tech space became fiercely competitive. Several new players entered the market, offering innovative solutions and challenging Byju’s dominance.
This intensified competition forced Byju’s to spend more on marketing and acquisitions, putting pressure on its finances.
Byju’s rapid expansion came at a cost. The company accumulated substantial debt, raising concerns about its financial sustainability. Investors started to question whether the unicorn could justify its sky-high valuations.
In 2021, Byju’s posted a staggering loss of $327 million, and the firm’s financial instability raised alarm bells.
Financial Woes Continued
Employees questioned Raveendran’s business instincts: Even as the lifting of Covid restrictions battered edtech, he sought to raise more equity — rather than conserve cash and target profitability.
The company borrowed heavily from various sources, including banks, private equity firms, and venture capitalists (VCs), to fund its expansion and acquisitions.
The company struggled to generate sufficient cash flow to meet its debt obligations promptly. This resulted in a $300 million loan default from Redwood Global Investments, a fund headquartered in Singapore, in 2021.
Reworking Debt, Rising Doubts
Byju’s then attempted to rework the conditions of a separate $500 million loan from the same fund but encountered another default in 2022.
In the face of this liquidity crunch, investors were concerned about Byju’s financial stability. Some creditors, including Blackstone, divested their holdings.
Byju’s defaulted on a $40 million interest payment, resulting in a lawsuit against the lenders in New York.
Leaving The Shipwreck
In June 2023, Deloitte, one of the world’s premier auditing firms, abruptly resigned as Byju’s auditor. They cited prolonged delays in receiving financial statements and unresolved modifications to the audit report.
Furthermore, Prosus significantly reduced Byju’s valuation from $22 billion the previous year to just $5.1 billion.
Things Change For The Worse
Things worsened when Byju’s took an unconventional path, resorting to extensive layoffs.
Thousands of employees were given the pink slip, and the rest were subjected to grueling double shifts with unrealistic targets.
Dr. Aniruddha Malpani, an angel investor, shared his perspective, calling Byju’s “the classic case of a man biting off more than he could chew. It’s a story of greed and a nauseous race to strike gold in the valuation race by savage competition that plagues the start-up space today.”
A Sigh of Relief
In a recent development, Byju’s received a lifeline earlier this week when the steering committee of lenders announced their decision to amend a $1.2 billion term loan with Byju’s, with the deadline set for August 3, 2023.
The company appointed a new CFO, former SBI chairman Rajnish Kumar, and former Infosys CFO TV Mohandas Pai to the board advisory council.
Will this be enough?
A New Chapter?
Today, Byju’s stands at a crossroads. The rise was undoubtedly spectacular, but the decline has been equally precipitous.
Will the Ed-tech giant adapt to a changing landscape and rebuild customer trust? It may need to pivot its strategy, prioritizing quality education and ethical practices over aggressive growth.
Is It The End?
The story of Byju remains a captivating tale of ambition and achievement, highlighting the potential and pitfalls of modern education technology.
Will Byju recover from its downward spiral or decline further to become one of the thousand businesses that failed to correctly capitalize on their USPs.
Only Time Will Tell?
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.