Byju’s, the Indian education technology giant that once soared to a valuation of $22 billion, has witnessed a spectacular fall from grace. In a shocking revelation, major investor BlackRock recently disclosed in an SEC filing that its stake in Byju’s is now considered worthless. This write-down marks a historic plunge for a company that was once a champion of the Indian startup scene.
Byju’s: From Edtech Hero to Zero in Record Time
The past year has been a series of unfortunate events for Byju’s. The Bengaluru-based company faced delays in meeting financial reporting deadlines in 2023. Furthermore, they fell short of their revenue projections by a staggering 50%, raising concerns about their financial health. Governance issues added fuel to the fire, with key personnel like auditors and board members abruptly resigning. This turmoil ultimately derailed a crucial $1 billion fundraising attempt.
Adding insult to injury, Prosus, another major investor in Byju’s, publicly slammed the company for allegedly disregarding their advice. Despite securing $200 million in funding earlier in 2024, the investment is currently under legal scrutiny by some of Byju’s largest investors. BlackRock’s move wasn’t entirely unforeseen. They had already hinted at trouble by slashing their valuation of Byju’s to $1 billion in October 2023. Both BlackRock and Byju’s have chosen to remain silent on the latest development.
The bad news doesn’t stop with BlackRock. In a separate research note, HSBC painted a grim picture for Byju’s future.While clarifying they weren’t writing off the entire company, their analysis concluded that Prosus’ 10% stake in Byju’s has suffered a dramatic decline in value. Interestingly, HSBC applied a hefty 50% discount to recent funding rounds of several startups in the edtech and SaaS sectors, including Meesho, Pharmeasy, and Stack Overflow. This move reflects a broader market correction, suggesting a potential bubble burst in these sectors.
Byju’s downfall serves as a cautionary tale. The company’s rapid ascent and subsequent nosedive raise questions about the sustainability of some high-flying startups. With its financial health and investor confidence severely eroded, Byju’s faces an uphill battle to regain its past glory. The company’s future trajectory remains to be seen, but one thing is certain: Byju’s story will be a case study for years to come.
