Troubles for Byju Raveendran, co-founder and CEO of Byju’s, once the country’s most valued edtech firm, may have started a few years ago, but 2024 saw the curtains finally coming down on the meteoric rise of the former math teacher.
Though Raveendran surfaced several times during the year and assured his employees that he would bounce back, such hopes seem more like a mirage. Even if Byju’s is able to get out of the insolvency proceedings, which it is fighting hard, it’s certain that the good old times will not return.
Raveendran’s meteoric rise from a village in Kerala to the helm of Byju’s — the world’s most valuable edtech startup — embodied the spirit of innovation and ambition. However, his journey also illustrates the pitfalls of rapid expansion and flawed governance, culminating in a precipitous fall this year.
Founded in 2011, Byju’s leveraged a growing appetite for digital education solutions, particularly among the country’s burgeoning middle class. Raveendran’s charismatic leadership and sharp marketing strategies propelled the startup to global prominence. By 2022, Byju’s was valued at $22 billion, making it a unicorn celebrated worldwide. It expanded aggressively, acquiring around 20 companies for around $3.63 billion, including global names like Osmo and Aakash Educational Services, marking its foray into offline learning as well.
The company also attracted significant investor interest, including from global heavyweights such as Mark Zuckerberg’s Chan Zuckerberg Initiative. High-profile endorsements, such as Lionel Messi’s appointment as a brand ambassador in 2022, further solidified its image as a pioneering edtech firm.
However, signs of decline began to show when it posted a loss of `4,588 crore in FY21. In FY22, the same swelled to `8,245 crore. Losses in itself for startups were not something unique to Byju’s, but this was accompanied by allegations of poor financial management, lack of transparency, and aggressive valuation metrics, which were seen to alienate investors while raising red flags among auditors. This was compounded by regulatory scrutiny; in 2023, Deloitte resigned as the company’s auditor, citing irregularities in financial disclosures. Allegations of foreign exchange violations further sullied its reputation.
By early 2024, these issues culminated in severe consequences. US-based lenders initiated bankruptcy proceedings against Byju’s to recover outstanding loans, and back home, the ministry of corporate affairs launched investigations into its financial practices. Shareholders, including prominent investors like Prosus NV, voted to remove Raveendran as CEO—a decision he legally contested. The Institute of Chartered Accountants of India found Byju’s auditors guilty of gross negligence, recommending punitive measures.
These crises forced the company to scale down, laying off thousands of employees and shuttering multiple offices and tuition centres. BlackRock, one of its key investors, slashed the company’s valuation from $22 billion in 2022 to a mere $1 billion, exposing the inflated metrics upon which its growth was predicated.
Analysts attribute several factors which contributed to the downfall of Byju’s. While acquisitions fuelled Byju’s initial growth, the integration of acquired entities proved challenging, draining resources and diluting focus. Questionable financial practices were another reason. Byju’s failed to prioritise fiscal prudence, with delayed filings, opaque accounting, and a reliance on overleveraged valuations to attract funding. Product challenges were also a big factor. Customer dissatisfaction with its core learning products highlighted a mismatch between marketing claims and educational efficacy. Further, lack of governance exacerbated the matter. Shareholders pointed to poor governance and a lack of accountability.
It will not be wrong to state that Raveendran’s story underscores the dangers of unchecked growth. Investors, enamoured by the potential of edtech to revolutionise education, overlook fundamental red flags. Byju’s focused more on building its valuation than proving the effectiveness of its products, ultimately eroding trust among customers and stakeholders.
For startups, Byju’s serves as a cautionary tale emphasising the importance of sustainable growth, transparency, and delivering genuine value. Investors, too, must balance ambition with due diligence, ensuring startups align with realistic and impactful business practices.
Raveendran’s rise and fall reflect the volatile nature of the edtech industry and the broader startup ecosystem. While his vision propelled Byju’s to extraordinary heights, mismanagement and overreach led to its decline. The aftermath of Byju’s downfall will likely prompt a recalibration of how startups, particularly in education, are valued and governed. This saga serves as a profound lesson for entrepreneurs and investors alike, advocating for the steady, purposeful building of businesses over the allure of rapid, unsustainable expansion.