New Delhi: In another blow to Byju’s, tech investor Prosus cut the edtech startup’s valuation to under $3 billion, 86% less than its peak valuation of $22 billion last year. After a rapid expansion during the Covid pandemic, Byju’s has been struggling with cash-flow problems and is embroiled in a dispute with creditors over a $1.2 billion loan.
Over the past year, shareholders including Prosus and Blackrock have successively cut Byju’s valuation to $11 billion in March, $8 billion in May, and $5 billion in June.
The latest disclosure, made by interim CEO Ervin Tu during Prosus earnings call, came just days after the startup announced a Rs 2,250 crore loss. Byju’s had delayed filing its 2021/22 financial results by nearly a year, prompting auditor Deloitte and three board members to quit. Its chief financial officer and chief technology officer also quit last week.
The results underscore how Byju’s — once the poster child for India’s booming startup economy — is struggling to escape a post-Covid funk. Creditors sued Byju’s this year after it breached covenants on a $1.2 billion loan. The standoff cast a spotlight on founder Byju Raveendran, whose meteoric rise from tutor to head of the country’s most valuable tech startup wowed investors.
The company spent heavily during the Covid-pandemic after schools and universities shut their doors. It acquired several edtech startups, not just in India but also in the US, as it tried to expand rapidly.
But growth has slowed since classes resumed, and the company’s challenges have been exacerbated by the months-long legal dispute that’s only showing signs of intensifying.
Prosus did not give a reason for the valuation cut, but in July it said the company’s management “regularly disregarded advice” despite repeated efforts by the Dutch-listed tech firm’s former director to improve governance.
Byju’s, which was once the official sponsor of the Indian cricket team, has also landed in the crosshairs of the BCCI. The cricket governing body has filed a case against the parent of cash-starved education provider Byju’s over a missed payment of sponsorship royalties of about $20 million, according to Bloomberg.
