The troubles for Byju’s seem far from over! Byju’s, once hailed as the most promising startup in India’s edtech space, has constantly been in controversies surrounded by financial frauds, mounting losses, outstanding debt obligations, misleading advertisements and various other violations over the past couple of years. As a result, investment giant Prosus has significantly reduced the valuation of Byju’s to below $3 billion. This marks a jaw-dropping 86% decline from the impressive $22 billion valuation the Indian edtech startup achieved early last year.
Byju’s is currently grappling with several challenges, as acknowledged by Ervin Tu, the interim chief executive of Prosus. In response to these challenges, Prosus and other backers are actively engaged in supporting the recovery efforts of the Bengaluru-based startup. Ervin Tu made these statements during an earnings call held on Wednesday, following the release of financial results by the investment giant for the six months leading up to September.
This isn’t the first instance of Prosus devaluing Byju’s. Prosus, currently holding a 9% stake in Byju’s, has been actively and consistently adjusting the worth of its holding in the edtech company for more than a year now. In June 2023, this adjustment resulted in a significant reduction, placing Byju’s valuation at just $5.1 billion.
Adding to this financial adjustment narrative, BlackRock, the world’s largest asset manager, followed suit by further cutting Byju’s valuation in May 2023. From $22 billion in March 2022 and $11.5 billion in March 2023, BlackRock lowered Byju’s valuation to just $8.4 billion. These successive devaluations by major investors underscore the fluidity and challenges faced by Byju’s in terms of market perception and financial standing.
Prosus, one of Europe’s most valuable tech companies, has identified Byju’s and Pharmeasy as “large underperformers” for the Amsterdam-listed firm. Notably, Pharmeasy, an online pharmacy startup, had raised capital this year at a valuation approximately 90% below its peak in 2021. This categorization by Prosus points to the challenges and underwhelming performance of these specific companies in their respective sectors.
Byju’s has not yet filed its financial year 2023 (FY23) data. During the fiscal year 2022, which ended March 31, 2022, the edtech unicorn witnessed 130% YoY growth in its revenue, amounting to Rs 3,569 crore. Byju’s reduced its EBITDA loss by 6.4% YoY, from Rs 2,406 crore in FY21 to Rs 2,253 crore in FY22.
As a prominent player in India’s tech landscape, Byju’s is not just a company; it’s a symbol of innovation and potential. The devaluation of Byju’s by two key investors, Prosus and BlackRock, adds another layer of concern for Byju Raveendran, the CEO of Byju’s. The edtech company need to take necessary measures to sustain in India’s rapidly expanding startup ecosystem.
