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
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”.
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.
-
Could Reeves limit pension tax-free cash to £100k? Experts warn retirees against pre-Budget rushA prominent Labour group of which chancellor Rachel Reeves is a member has suggested more than halving the maximum amount of cash pensioners can take tax-free. But wealth experts are warning retirees against irreversible decisions before the Budget.
-
Buying vs renting: is is better to own or rent your home?The higher mortgage rates of recent years have actually made renting comparatively cheaper, analysis suggests
-
Yoshiaki Murakami: Japan’s original corporate raiderThe originator of Japanese activism, Yoshiaki Murakami, was disgraced by an insider-trading scandal in 2006. Now, he's back, shaking things up
-
Cash in on the vast growth potential of the companies electrifying the worldOpinion Martin Todd, portfolio manager, head of sustainable equities, Federated Hermes, highlights three electrification companies where he'd put his money
-
Galliford Try has firm foundations for strong growthBuilder Galliford Try has a finger in a wide range of pies, notably important work in the public sector
-
Card Factory is a stand-out small-cap going cheapIn a digital world, we still value the personal touch. That’s good news for Card Factory, whose unique business model is suited to weather all economic storms
-
8 of the best smallholdings for sale nowThe best smallholdings for sale – from a medieval cross-passage farmhouse in Taunton, Somerset, to a former farmhouse with an orchard in the Welsh Marches
-
How much gold does China have – and how to cash inChina's gold reserves are vastly understated, says Dominic Frisby. So hold gold, overbought or not
-
How to invest in undervalued gold minersThe surge in gold and other precious metals has transformed the economics of the companies that mine them. Investors should cash in, says Rupert Hargreaves
-
Debasing Wall Street's new debasement trade ideaThe debasement trade is a catchy and plausible idea, but there’s no sign that markets are alarmed, says Cris Sholto Heaton
