Byju’s app when launched in 2015, changed the landscape of online learning in India. In 2017, Byju’s launched its Math app for kids and by 2018, it had around 15 million users and 900K paid users. And the same year, Byju’s became India’s first edtech unicorn. Then what happened to the company? Once India’s first Edtech Unicorn, Byju’s is now struggling to keep its offices open and pay its employees. In this article, we will take a closer look at Byju’s financial crisis and what factors contributed to its downfall. 

How Byju’s became the world’s most expensive edtech startup

Like any other startup, Byju’s also had its humble beginnings. It started when Byju Raveendran helped some of his friends prepare for the CAT exams. After that, he realised he had a passion for teaching. He took the exam twice himself and scored perfect marks both times. This led to many students asking him to teach them, which was the formal beginning of Byju’s coaching classes for CAT in 2006. 

In 2011, he founded Think and Learn Pvt. Ltd. with his wife Divya Gokulnath and some friends. They took school courses and curriculums, broke each chapter into interactive videos and provided real-life examples to teach fundamental concepts to the students. In 2015, It launched Byju’s learning app and in 2018, Byju’s became a billion-dollar startup. 

Byju’s became a popular name in Indian households with children. The pandemic brought more business to the company as everyone was studying online which led to its expansion. In 2022, it was valued at $22 billion. 

The downfall of Byju’s and its reasons 

After the pandemic, the company faced a lot of challenges, one being the management of the sudden expansion. In 2023, the company started losing its value and took a big hit when the Enforcement Directorate fined the company under a Foreign Exchange Management Act (FEMA) violation worth ₹9,362.35 crore. Another big hit was from its US lenders who filed a lawsuit against the company over a loan of $1.2 billion. 

Byju’s was also struggling as the sudden expansion caused a toxic work environment and pressure on the employees to find new customers and keep the existing ones. The company’s investor Prosus also cut its stake value from $1.62 billion to now around $288 million. This led to many layoffs and internal mismanagement of money. 

The one prominent reason for Byju’s downfall is its mishandled expansion during the pandemic. During the period of its growth 2020-2021, the company acquired many ed-techs in the US to expand internationally. But after the pandemic, its growth slowed down and with the additional weight of the legal financial troubles, Byju’s losses rose to Rs. 4,564 crore from Rs. 252 crore in just one year. 

Another reason is its aggressive marketing and branding during the pandemic. Byju’s got Messi to be its global ambassador. It also sponsored the Indian cricket team and several other celebrity endorsements and mismanagement of finances has led to its fall after the pandemic. 

What is happening to Byju’s is an example of how a thread of mismanagement and poor decision-making can tear down a thriving business. Currently, Byju’s is trying to raise $200 million through the rights issue of shares to stabilise the company. 

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