India education-tech startup juggernaut Byju, once valued at $22 billion, has faced a dramatic fall with major investors like BlackRock and HSBC slashing the valuation of their stakes to zero, citing escalating legal cases, funding crunch, financial challenges, and governance issues.
The company, once India's most valuable startup, posted a substantial net loss exceeding $1 billion for the fiscal year 2021-2022, fell short of revenue projections by over 50%, faced allegations of unethical sales practices, board member resignations, auditor resignations, and legal proceedings.
Byju's has defaulted on a $1.2 billion term loan B, leading to lenders petitioning for bankruptcy proceedings against its subsidiaries in a US court, alleging non-payment of debts and unlawful diversion of $533 million in loan proceeds.
Investors also alleged oppression and mismanagement, seeking the removal of Byju Raveendran and current management, claiming that funds from a rights issue were not deposited into an escrow account and shares were allocated against the tribunal's order.
The company is embroiled in legal battles in India and the U.S., including a notice from the Enforcement Directorate for alleged FEMA violations.
Byju's implemented cost-cutting measures, including significant salary reductions and leadership changes. Its founder, Byju Raveendran's net worth fell to zero from $2.2 billion in 2023 due to the company's financial crisis.
WhiteHat Jr, a subsidiary of Byju's, reported significant losses in FY21, with expenses exceeding earnings, despite investing in expansion, particularly in the U.S.
Byju's raised money at a valuation of $220 million-$250 million, a drastic decrease from its peak valuation of $22 billion.
Byju's spokesperson stated that the company is optimizing WhiteHat Jr for organic and efficient growth while evaluating all business units for profitability and global expansion, denying plans to shut down WhiteHat Jr despite facing losses and downsizing affecting employees across geographies.
Sources: TechCrunch, Vartha Bharati, News18, Jagran English, The Hans India, Wion News, India West, The Tech Portal, News9 Live, NDTV, Business Outlook India, Business2Community, Livemint, The North Lines, LiveLaw.
This article was written in collaboration with Generative AI news company Alchemiq.
