A sign at Byju’s tuition center operated by Think & Learn Pvt., Friday, February 2, 2024, in Mumbai, India. A division of Byju’s, once one of India’s hottest technology startups, has gone bankrupt in the United States. A court-appointed representative who took over a shell company after it defaulted on a $1.2 billion debt.Photographer: Dheeraj Singh/Bloomberg via Getty Images
Dheeraj Singh | Bloomberg | Getty Images
Once India’s most valuable startup, Byju’s suffered a series of setbacks, including allegations of accounting fraud and mismanagement, leading to a sharp reversal in its fortunes.
The Indian edtech startup’s valuation, valued at $22 billion in 2022, plummeted by 95% as investors reduced their stakes in multiple rounds. It was most recently reduced to $1 billion after BlackRock reduced its stake in Biju last month, according to . media coverage.
The company, which offers a wide range of services from online tutorials to offline coaching, has raised billions of dollars from investors around the world during the coronavirus pandemic, which has increased demand for online education services.
Last Friday, Byju’s major shareholders, including Netherlands-based global investment group Prosus, voted to remove founder Byju Raveendran as chief executive.
Prosus said in a statement to CNBC that investors who attended the special meeting “unanimously passed all resolutions submitted for vote” that also called for changes to the board of directors.
“These include requests to resolve Byju’s outstanding governance, financial mismanagement and compliance issues, as well as a request to reconstitute the board of directors, which will no longer be controlled by Byju’s founders. It was like that. [Think & Learn Private Limited]; and changes in company leadership,” the statement released last Friday said.
However, Byju’s rejected the resolution stating that the EGM was “null and ineffective” due to the low turnout with only “a few selected shareholders” present.
“At worst, passing a non-enforceable resolution challenges the rule of law,” the Bangalore-based company said in a statement to CNBC.
“Byju’s has stressed that the Karnataka High Court has granted interim relief and has clearly stated that any decision taken during the session will have no effect till the next hearing,” it said.
“Because the founders did not participate in the meeting, a quorum was not lawfully established and the resolution was null and void.”
History of Byju
In 2011, Raveendran, a teacher and engineer, founded Think and Learn Private Limited, the parent company of Byju’s. Raveendran was born into a family of teachers in Azhikode, a small village in southern India.
company claimed The release of the company’s flagship learning app, Byju, reportedly received 2 million downloads within three months of its rollout in 2015. This app offers interactive videos, games, and quizzes to help students prepare for their daily lessons and exams.
Byju’s has experienced exponential growth due to the COVID-19 pandemic, which shut down traditional classrooms and led to a surge in demand for online learning.
In November, Byju co-founder Divya Gokulnath told CNBC that the company has more than 100 million monthly students on its platform.
Byju’s growth has attracted global investors and attracted large funding rounds, including a $1.2 billion debt financing in November 2021, according to the company database service. crunch base.
Byju’s, which was well-funded, made a series of acquisitions from 2017 to 2021.
Byju’s largest acquisitions include: Aakash Educational Servicesis a leading test preparation company in India. reportedly paid Approximately $950 million in 2021.
Other strategic acquisitions include: Epic, a US-based digital reading platform for children ($500 million), Educational game maker Osmo ($120 million) and an online coding school. white hat junior.
“2022 is going to be the year of the biggest acquisitions. There will be nine big acquisitions. I mean, the pandemic was great because people realized that online education can be part of mainstream learning. Because we’ve solved the biggest problem, which is that there isn’t,” Gokulnath told CNBC last November. .
“But the downside was also that we had to grow at a breakneck pace. We needed to grow to ensure we could meet demand,” she added.
So what went wrong?
Byju’s had to lay off at least 1,000 employees last June as online learning slowed as pandemic restrictions ended, according to technology job postings tracker layoff.fyi.
That same month, the company’s auditor Deloitte and three prominent board members ended their relationship with Bijou’s after questions surfaced about the company’s financial health and governance practices, Reuters reported.
Byju’s filed its 2022 financial report in November last year. after a year’s delay This was due to governance issues and the resignation of the auditor. Operating loss for its core online education business amounted to 24 billion Indian rupees (approximately $290 million).
“What we should have focused on earlier is governance,” Gokulnath told CNBC in a November interview. “That’s something we’re continually building on for the next year. We hope we can stand on the governance side as well.”
Byju’s is reportedly struggling to repay a $1.2 billion loan and It is said that there is a problem with staff salaries. In the same way. The company said in January: Raise $200 million in equity capital increase To settle “immediate debts” and other operating costs.
The company’s U.S. division Alpha Inc. files for Chapter 11 bankruptcy protection Proceedings will be held in Delaware court on February 1st.
Byju’s did not respond to CNBC’s request for comment.
On whether Byju’s has lost shareholder confidence, Gokulnath said in November: We are working to build this together again. ”
