Even by the standards of India’s febrile start-up scene, the rise and fall of Byju’s, an educational technology or “edtech” company, has been startling. Founded by “charismatic former maths teacher” Byju Raveendran, the firm sold tutoring services to millions of parents seeking to prepare their children for the country’s “brutally competitive school entrance exams”, says the Financial Times. Credited with reshaping the landscape of online education, it attracted big-name backers such as Mark Zuckerberg, BlackRock and Dutch tech investor Prosus – becoming India’s most valuable start-up in 2022, worth an estimated $22 billion. Two years on, both the firm and its founder’s reputation are in tatters, and creditors are scrambling to claw back cash.
Byju's impact on education in India
It looks like an uphill struggle. Byju’s, which expanded aggressively into the US, faces “legal battles from Delaware to Bengaluru” with litigants ranging from the Qatar Investment Authority to India’s national cricket authority, which is pushing to have Byju’s declared insolvent in hopes of recovering “sponsorship dues”. Raveendran, 44, has skipped the country – along with his wife and co-founder Divya Gokulnath, and brother Riju. Reportedly, they are all living together in Dubai’s “affluent” Emirates Hills.
In a somewhat farcical exchange with a US judge earlier this year, Riju, the sole director of US-based Byju’s Alpha (a company set up to receive loans), was tasked with explaining the whereabouts of some $533 million. “I really don’t know,” he replied, assuring the judge “he had sent emails” to his housemates asking the same question. Unsurprisingly, says the Indian online news channel Wion, big questions are being asked about corporate governance and management practices. Auditor Deloitte pulled out in 2022 citing “delayed financial statement submissions”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In 2007, Raveendran and his wife founded a company that eventually became Think and Learn, says the FT. Word of his innovative methods – and the results he was getting – quickly spread. Within a couple of years, Raveendran was travelling to “nine cities a week” across India, taking maths classes in “packed stadiums”. Ultimately, they decided that the only way to manage demand was to go digital and, in 2015, launched the main Byju’s app. The couple offered smartphone- or tablet-based learning to students from primary school age upwards, proclaiming they were “on a journey to revolutionise education in India” – a message that resonated with major investors, including the Chan Zuckerberg Initiative and Sequoia Capital, whose arrival transformed Byju’s into a billion-dollar start-up. The pandemic lockdowns put growth on steroids – and Byju’s expanded rapidly via mergers and acquisitions internationally. When interest rates started to rise and “the cheap money dried up, the value of the company plunged and investors were forced to write off stakes worth hundreds of millions of dollars”.
The paperchase continues
Holed up in his luxury base in Dubai, Raveendran denies any allegation of fraud, says Business Times (India) – and, indeed, blames his backers for Byju’s meltdown. “Investors didn’t care about students or parents, they just wanted me to create a $100 billion company,” he lamented on a recent call with journalists, claiming they ran away at the first sign of trouble. He has also launched a countersuit against his US lenders, accusing them of unfairly accelerating loan terms and negotiating in “bad faith”. “I have felt like a man screaming into a hurricane of hurdles,” wrote Raveendran in a memo to Byju’s remaining (unpaid) staff in August. Meanwhile, the money paper chase continues.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
8 of the best houses for sale for around £500,000Some of the best houses for sale for around £500,000 – from a 19th-century stone farm cottage in North Yorkshire and a two-bedroom apartment in Edinburgh’s New Town to a converted Methodist chapel in Norfolk
-
What will the unravelling of US-China trade mean for the economy?What will a US-China decoupling mean for the global economy?
-
Two ways to tap into monopoly profits from airportsMost investors can’t get their hands on airports. Here are two ways you can
-
Lorne Michaels: the ringmaster at Saturday Night LiveLorne Michaels created Saturday Night Live, a cultural phenomenon that launched the careers of countless stars in America.
-
Fat profits: should you invest in weight-loss drugs?The latest weight-loss treatments could transform public health and the world economy. Should you invest?
-
How investors could profit from Ramsden Holdings' four-part growth strategyRamsdens Holdings offers a diversified set of financial and retail services and a juicy yield, says Dr Michael Tubbs
-
How to invest in the booming insurance marketThe insurance sector is experiencing rapid growth after years of stagnation. Smart investors should buy in now, says Rupert Hargreaves
-
Elliot Grainge: the music mogul of the TikTok age who will now helm Atlantic RecordsElliot Grainge, the entrepreneur behind the upstart music producer 10K Projects, has taken over the top job at Atlantic Records, the label synonymous with musical greats. Can he transform its prospects?
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocksOpinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
-
BP's 'long, painful decline' – and why next year could be even tougherOpinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
