Byju’s is banglore based multinational edtech company. It was founded in 2011 (officially incorporated as Think and Learn) by Byju Raveendran and his wife Divya Gokulnath.
Byju Raveendran born in 1980 in Kerala. He is a former teacher (studied Mechanical Engineering) who turned entrepreneur. Initially, his close friends who were preparing for MBA exams asked him to teach them as he was good in maths. He started teaching them and gave the same exam and scored 100 percentile after which he started teaching on the terrace of his friend’s place. As the number of student grew, he started his edtech firm under the name Byju with Tagline “Fall in love with learning”. He moved his class to classroom as coaching centre with just Rs.2 lakh. Byju started online video based learning program for CAT in 2009.
His teaching style become popular and number of student keep increasing.
INTRODUCTION OF BYJU’S LEARNING APP (Steps toward Success)
![Edtech startup Byju's making up shortfall to India pension fund | Reuters](https://cloudfront-us-east-2.images.arcpublishing.com/reuters/ULK52N7FJJLTRJK6MLO675AL2Q.jpg)
In 2012, Byju’s entered Deloitte technology ratings and raised $9 Million from Aarin Capital in series A round.
In 2014, Byju’s launched tablet learning programs.
Byju launched his learning app (his flagship product) in 2015 for school students. The App provides online coaching for NEET, UPSC, SSC, GMAT, JEE, GRE etc. The Goal was to provide online coaching to 4th to 12th class students. His app had more than 3.5 lakh annual subscriptions. His App become the largest Education Company that is the most preferred education mobile app in India that provide effective and engaging programs.
Later in 2015 & 2016, it raised around $125 Million by Sequoia Capital & Chan Zuckerberg. It became a business case study at Harvard Business School to illustrate how Byju’s technology impacting education system.
In 2017, it reached valuation of $600 Million and raised another $30 Million by Verlinvest. It then acquired TutorVista and Endurite to expand internationally.
In 2018, Byju’s became a unicorn with valuation of over $1 Billion and made Shah Rukh Khan as its brand ambassador.
In 2019, Byju’s become the official sponsor on the Indian cricket team jersey and raised $23 Million from Bond Capital. It became world’s most valued edtech startup (decacorn) with a valuation of $10.5 billion.
In 2020, it acquired many companies such as WhiteHatJr, LabInApp and signed to acquire Aakash Education Service Ltd. For $1 Billion.
In 2021, the valuation reached $16.5 Billion and in 2022, It reached $22 Billion and sponsored Qatar Worldcup.
DECLINING PHASE OF BYJU’S
Byju’s faced a Rs.20 crore defamation case by the founder of Whitehat Jr against a software engineer. The court ordered the engineer to remove specific tweets commenting about the company’s teachers and their qualifications and restrained him from using his Youtube channel. The suit was withdrawn.
The company also faced a Consumer Complaint for non-refund of the fees.
In 2021, It raised $1.2 Billion from various Banks (Syndicated loan- where loan is raised through different banks and Hedge funds) with the condition that by September 2022, it will publish its financial results and upon failure of the condition it will be considered as Technical Default. It publish its results 15 days late with poor records (4% revenue growth and 15 times more losses).Then banks asked for prepayment of loan with increased interest rate. After which, Byju’s filed a case of predatory lending against it.
Now as of June 2023, Byju’s did not pay even the interest amount saying that they wil pay only after the court case verdict come out.
WHY BYJU’S FACED DECLINE?
![BYJU's company is inching towards a slow and torturous death](https://tfipost.com/wp-content/uploads/2022/09/Byjus-Slow-death.jpg)
When a startup raises funds, it first present before investors what the company has been earning and how many users it has. It shows that if investor invest into their startup they will increase the number of users by 10x and raise (say 1 Crore for 10% Equity of the company) and as a result its valuation becomes 10 crores. Then this startup goes to the other investor and show them that with their investment they can expand more and sell 10% of their company for 100 crores. Now, their valuation reaches 1000 crores.
Here what happened is that the first investor invest 1 crore which has now become 100 crores. This process is repeated again & again till the company value is extremely inflated.
After showing this inflated value, it enters into stock market and issue IPO to exit the existing investors by selling their shares to public. Now a common investor invests in this startup and the existing investors exits by taking their money out of the company’s shares.
Byju’s acquires a lot of firms to hide its poor performance and losses with the consolidated balance sheets (Byju’s profit+ Acquired company’s profit) to attract more investors.
Employees were hired in large number with attractive packages but in reality real salary was low with sales incentive and upon not meeting sales target will lead to loss of jobs. So, teachers start doing malpractices such as forcing the parents to buy the course, saying that their child will fail if not studied in their course and they even started adding their own money to the company’s account (fake sales) to fulfill the target. The working environment of staff become so toxic that employees start leaving the job and even opened up about the same on different platform such as youtube.
Accelerated Revenue Recognition (According to this principle, revenue is considered only when it is accrual). For example; if a consumer pays for the mobile subscription for 12 months (say Rs.1200) the company will have to show only Rs.100 as sales for one month and not total 1200 as their monthly sale. But Byju’s showed its tablet sale which consumer pays in EMI as monthly sale which leads to overstatement of Revenue and lying to investors (Byju’s Revenue- Rs.2400 crores). Deloitte pointed out the discrepancies when asked for delay.
Byju’s aggressively done Marketing in order to show people that the company will grow while in reality it is making huge losses (Rs.4600 crores).
During pandemic, online education boomed but as the lockdown elevation happens, they realized that only online business will not be profitable and hence they started offline home coaching and worked contrast to its USP to bring revolution in the education field.
Current scenario is that company’s valuation has slipped down by 62.7% which is $8.2 Billion as of June 2023. Byju’s business model is very unsustainable. It might overcome Short term crisis but it may not work in long term.
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