Less than two years ago, it was valued at $22bn and was one of the most familiar brand names on the planet, thanks to a shirt sponsorship deal with India’s cricket team.

Today, though, Byju’s is fighting for its life.

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A number of shareholders have written down the value of their stake in the business to almost zero and the company, which still has 14,000 employees, is now facing insolvency proceedings.

Where did India’s once most valuable start-up and first ‘unicorn’ come from?

Byju’s, based in Bangalore, was for a time India‘s most valuable start-up and its first “unicorn” – a start-up that has achieved a valuation of $1bn or more – in the education technology (edtech) sector.

The business has its origins in 2006 when Byju Raveendran, an engineer working in the shipping industry, began informal maths classes for his friends working in the city’s tech sector. Before long, he was teaching hundreds of people at a time, taking the service to other major Indian cities.

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In 2011, along with his teacher wife Divya Gokulnath, he launched Think & Learn Private Limited although, at this stage, the business – branded Byju’s – was still largely offering tutoring to prepare primary and secondary school students for exams.

In 2015, it began offering online tutoring with the mission to “make learning fun”, a far-sighted move given internet penetration in the country at the time was less than 15%.

Right place at the right time

It was, accordingly, in the right place at the right time when smartphone adoption took off – with demand surging for its educational apps in a number of the many languages spoken in the country. It later diversified into selling other products and services including laptops and tablets on to which its software was pre-loaded.

Venture capital firms around the world were watching and began investing in a number of funding rounds by the business.

One of the first to invest was Silicon Valley-based VC firm Lightspeed while other early backers included The Chan Zuckerberg Initiative, the philanthropic organisation launched by Facebook founder Mark Zuckerberg and his wife, Priscilla Chan.

They – along with the Chinese e-commerce giant Tencent – were among those investing in the July 2017 funding found that secured Byju’s unicorn status.

With Byju’s story becoming a case study at Harvard Business School, others subsequently piling in included the renowned US VC firms General Atlantic and Tiger Global Management, the private equity firm Silver Lake, the Qatar Investment Authority and Naspers, the South African internet investor famous for backing Tencent, with the company embarking on eight funding rounds between March 2019 and September 2020.

By then, schools around India were in lockdown due to the pandemic, while Byju’s had attracted so much funding it was able to buy a number of other edtech businesses and launch around the world.

Global name recognition

It had also, thanks to its shirt sponsorship of India’s cricket teams from September 2019, achieved global name recognition.

The high-water mark came when, in October 2022, it was valued at $22bn in another funding round led by the Qatar Investment Authority and, by then, Byju’s was styling itself as “the world’s leading edtech company”.

It also signed a deal with Argentinian footballing superstar Lionel Messi – reportedly worth between $5-7m – to become brand ambassador for its social impact arm Education For All and was a major sponsor for the 2022 football World Cup in Qatar.

Yet these high-profile sponsorships – another being Bollywood A-lister Shah Rukh Khan – came at a price. By some estimates, at the end of 2022, Byju’s was spending a third of its revenues on marketing and sponsorship.

A turning point for investors

At the same time, with the world emerging from lockdown, demand for educational services delivered online was beginning to fall.

Investors, who had previously not been as focused on start-ups becoming profitable, began to ask questions on that front and about why the company had not had a chief financial officer for more than a year.

As accounting discrepancies began to emerge, so did stories about the company’s high-pressure sales techniques and how they were pushing some families into debt. Complaints about mis-selling multiplied, including accusations that Byju’s disguised consumer loans offered by its partners, bundled in with its tablets.

It also became clear that Byju’s had failed to do proper due diligence on some of its acquisitions, chiefly in 2020 and 2021, over-paying as a result.

The downfall

Byju’s was forced to start closing offices and laying off thousands of employees.

In May last year it raised $1bn in an emergency funding round, led by the US investor Davidson Kempner, to enable it to repay a $1.2bn loan raised just two years earlier.

The following month, as it launched a fresh round of lay-offs, Deloitte resigned as the company’s auditor along with three directors, including the representatives of The Chan Zuckerberg Initiative and Prosus, the Dutch-listed business set up by Naspers to house its stakes in tech businesses.

In February this year, with the company having shed an estimated 18,000 employees during the previous 18 months or so and having warned remaining ones there would be a delay to them receiving their salaries, shareholders voted to remove Mr Raveendran as chief executive – although India’s courts have to date prevented the company from carrying out this order.

A month later, the US courts froze some $553m worth of disputed funds that lenders said belonged to them, while the company’s US subsidiary has filed for bankruptcy protection.

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Things getting serious

The latest court ruling looks more serious.

The country’s National Company Law Tribunal today accepted a request from the Board of Control for Cricket in India (BCCI) to begin insolvency proceedings over £14.6m it claims to be owed by Think & Learn.

Byju’s, which was replaced by the fantasy sports platform Dream11 as India’s shirt sponsor in July last year, had sought arbitration.

But the ruling installs an insolvency professional to replace the company’s management in running the business and, effectively, puts its creditors in control. It is now down to them to decide whether the company can remain in business or will be sold or liquidated.

Mr Raveendran, meanwhile, is said to be in Dubai – a country from which India is unable to extradite its nationals – and reportedly faces arrest if he returns home.

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Either way, it looks as if stumps have been drawn on an extraordinary business career.

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