Prosus marks down Byju’s valuation to less than $3 Billion in a year

In a significant setback for Byju’s, tech investor Prosus has slashed the edtech startup’s valuation to less than $3 billion, marking an 86% decline from its peak valuation of $22 billion last year. This development follows a series of challenges, including cash-flow issues and a dispute with creditors over a $1.2 billion loan. Let’s delve into the recent revelations and understand the hurdles faced by Byju’s in the evolving landscape of India’s edtech sector.

Byju’s Valuation Rollercoaster:

Over the past year, Byju’s has experienced successive valuation cuts by prominent shareholders, including Prosus and Blackrock. The valuation dipped to $11 billion in March, further plummeting to $8 billion in May and $5 billion in June. The latest blow comes amid a turbulent period for the edtech giant, characterized by financial losses, delayed financial results, and key executive resignations.

Financial Woes and Leadership Exodus:

Interim CEO Ervin Tu disclosed the latest valuation cut during Prosus earnings call, coinciding with Byju’s announcement of a substantial ₹2,250 crore loss. The delay in filing 2021/22 financial results led to the resignation of auditor Deloitte and three board members. Notably, the chief financial officer and chief technology officer also resigned recently, signaling a challenging period for Byju’s leadership.

Post-Covid Struggles:

Once celebrated as the poster child of India’s flourishing startup ecosystem, Byju’s is now grappling with post-Covid challenges. The company aggressively expanded during the pandemic, acquiring edtech startups in India and the US. However, growth has slowed since the resumption of regular classes, compounded by a protracted legal dispute with creditors.

Prosus’s Perspective:

Prosus did not specify the reason for the valuation cut, but a statement in July hinted at management’s disregard for advice, raising governance concerns. This further complicates Byju’s narrative as it navigates through financial and legal troubles.

Byju’s and the BCCI Dispute:

Beyond financial woes, Byju’s is entangled in a legal battle with the Board of Control for Cricket in India (BCCI). The cricket governing body has filed a case against Byju’s parent company over a $20 million missed payment of sponsorship royalties. This adds another layer of complexity to Byju’s challenges.

Conclusion:

As Byju’s grapples with a sharp decline in valuation, financial losses, and legal battles, the once-thriving edtech giant faces a critical juncture. The evolving dynamics in India’s edtech landscape and governance concerns underscore the challenges ahead. Stay tuned as Byju’s navigates through this turbulent phase, impacting not only its own trajectory but also shaping the narrative of India’s edtech sector.