In the virtual press meeting lasted for 2.5 hours, he said that the company's investors had pushed for aggressive growth.
Byju’s, once India’s most valuable startup has experienced a dramatic reversal of fortune as founder Byju Raveendran revealed on Thursday in a virtual press conference that the company’s worth has effectively plummeted to zero. It was said that the simultaneous resignation of key investors Prosus, Peak XV Partners and the Chan Zuckerberg Initiative from its board in 2023 significantly exacerbated the company’s struggles.
“Byju’s is worth zero today,” – founder Byju Raveendran in a press conference. pic.twitter.com/M1LbHwtTHY
— Manish Singh (@refsrc) October 17, 2024
In the virtual press meeting lasted for 2.5 hours, he said that the company’s investors had pushed for aggressive growth that urged him to expand into 40 markets simultaneously and that these investors greatly benefited from this growth with Sequoia making an eight-fold return on their $50 million investment, he added.
He also revealed that the company’s board comprising these investors unanimously approved all major acquisitions and expansion plans. However, he pointed out the irony that the same board members are now criticising the company’s strategies. Byju Raveendran also mentioned that Byju’s had received solid SPAC offers valued between $40-48 billion but was unable to capitalise on them due to market shifts.
Byju Raveendran acknowledged that the company made mistakes including getting carried away with growth initiatives driven by investors and that most acquisitions were initiated by investors who now distance themselves from the company’s challenges.
Earlier this month, Byju Raveendran talked about the disappearance of $533 million in lender funds. He had claimed that the money was used for legitimate business purposes contradicting lenders’ allegations of fraud. He currently combats cases linked to this and another bankruptcy case as well.
How did the company fall like this?
Byju Raveendran’s journey began in 2010 with renowned Common Admission Test (CAT) coaching sessions. His success led to the founding of Think & Learn Pvt Ltd in 2011 and the company’s focus on results-driven teaching attracted a massive following. In 2013, Ranjan Pai and Mohandas Pai invested in the ed-tech business marking the start of Byju’s rapid ascent.
Byju’s quickly turned to online education by launching its first mobile app in 2015. with major investments including $145 million in 2016 and $70 million in 2017 paved the ey for his temporary success. The company then aggressively expanded employing thousands of people and launching nationwide advertising campaigns. Byju’s had become an education empire with over 50,000 employees and a global presence By 2019.
Also, read| Byju Raveendran Finally Broke Silence, Explains Missing $533 Million Amid Fraud Allegations
However, Byju’s confronted criticism arose over aggressive sales culture pressuring parents into purchasing expensive courses and devices. Adding fire to fuel, the COVID-19 pandemic boosted the tech sector, but Byju’s momentum waned as pandemic impacts subsided. Acquisitions failed to deliver, and concerns mounted about aggressive accounting practices.
Despite internal issues, Byju’s being a Juggernaut continued extravagant marketing spending including sponsoring the Indian cricket team and international endorsements like the FIFA World Cup. However, lavish spending and investments to buy other firms resulted in layoffs and controversies. By late 2022, Byju faced serious challenges facing questions from parents about course quality, aggressive sales tactics and alleged predatory lending practices. He wanted to come out of it but the missions jinxed and many acquisitions failed and the creditors called for dissolving US-based subsidiaries.
It was in 2021, that Byju’s secured a $1.2 billion loan to fuel the international expansion of his ed tech business Byju’s. Raveendran stated that $200 million went towards marketing including sponsoring the FIFA World Cup and partnering with Lionel Messi and another $300 million funded losses in Tangible Play businesses and had immense losses. However, these explanations didn’t make him stand high among the investors. Gradually they started moving away from the company and Byju’s drained its health bit by bit.
Today, Byju stands at a crossroads facing both legal and financial troubles. His Tuition centers are shutting down and creditors demand immediate repayment. However, Founder Byju Raveendran remains optimistic about Byju’s 3.0 which is an AI-driven educational platform as he claims that it is going to be a real comeback of the ed-tech platform.
Next level of overconfidence!😕
“Byju’s is worth zero today, but nobody can stop me from teaching students. Investors will come back when they see value.” — Byju Raveendran.
Why did Byju’s stumble?
According to him, the biggest setback came when three major investors — Prosus,… pic.twitter.com/D1Rawo4g2I
— Amit Misra (@amit6060) October 18, 2024
Also, read| Supreme Court Stays Byjus’s Whopping Rs 158.9 Crore Settlement With BCCI
