Byju's Financial Downturn: From $22 Billion To Under $3 Billion In Just One Year Amid Growing Challenges

Byju's Financial Downturn: From $22 Billion To Under $3 Billion In Just One Year Amid Growing Challenges

This latest disclosure of Prosus lowering the valuation of ed-tech firm Byju's below US Dollow 3 billion came just days after the startup announced a Rs 2,250 crore loss.

Oliviya KunjumonUpdated: Thursday, November 30, 2023, 01:20 PM IST
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Byju's Financial Downturn |

Another setback for Byju's comes as Dutch venture capital firm Prosus reduced the valuation of the ed-tech startup below US dollar 3 billion on Wednesday. This significant devaluation marked an 86 percent drop from its peak valuation of Us dollar 22 billion recorded last year.

During Prosus' earnings call for the first half of the financial year 2024, Prosus Interim CEO Ervin Tu mentioned that the valuation of Byju's is below US dollar 3 billion without providing exact figures.

In its earnings reports, the company stated that it had discountinued equity accounting for both Byju's and Udemy. Meanwhile, PayU, the fintech subsidiary of Prosus, reported a significant revenue growth in the first half of FY 2024, primarily driven by the expansion of existing merchants, Wibmo, and its omnichannel operations. The company's report indicates that PayU's revenue in India surged by 15 percent to reach US dollar 211 million.

Byju's Valuation Drops from US dollar 22 Billion to Under US dollar 3 Billion in 12 Months

Amid the Covid pandemic, Byju's is facing cash-flow issues and a disagreement with creditors concerning a US dollar 1.2 billion loan. Shareholders such as Prosus and Blackrock have sequentially reduced Byju's valuation over the past year to US dollar 11 billion in March, US dollar 8 billion in May, US dollar 5 billion in June and the recent US dollar 3 billion in November, this Wednesday.

This latest disclosure of Prosus lowering the valuation of ed-tech firm Byju's below US Dollow 3 billion came just days after the startup announced a Rs 2,250 crore loss.

In the aftermath of the Covid-19 pandemic, Byju's, a prominent player in India's startup landscape, faces mounting challenges. The company, once celebrated for its growth, finds itself in a complex situation after failing to repay a substantial US dollar 1.2 billion loan, leading to legal disputes with creditors.

Byju's had aggressively invested during the pandemic-induced closures of educational institutions, acquiring multiple edtech startups both in India and the US. However, their rapid expansion encountered hurdles as growth slowed significantly once schools resumed operations.

The company invested highly during the pandemic-induced closures of educational institutions, acquiring multiple edtech startups both in India and the US. However, their rapid expansion encountered many challenges as growth slowed significantly as soon the schools resumed operations.

Apart from this, prolonged legal battle worsens the company's woes, making things harder for them.

By October 2022, Byju's had a valuation exceeding US dollar 22 billion after securing US dollar 250 million in a funding round.

Byjus Respond to the ED notice and FEMA violation charges

Byju's, the ed-tech company, on Wednesday, said that the notice received from the Enforcement Directorate pertains to technical matters, such as the delay in filing Annual Performance Reports (APR) related to foreign direct investment worth Rs 8,000 crore. The company expects a minimal penalty, if imposed, for this issue. The company stated that the delayed APR filing is merely a "technical matter," and is confident of effectively handling the case.

BYJU's Receives ED Show Cause Notices Over Rs 9362.35 Crore FEMA Violations

The Adjudicating Authority under FEMA, 1999 has issued Show Cause Notices to M/s Think & Learn Private Limited and Byju Raveendran on November 21 following a complaint filed by the Directorate of Enforcement (ED). The notices pertain to alleged contraventions of FEMA, 1999 amounting to Rs. 9362.35 Crore. The ED initiated an investigation based on complaints related to foreign investment received by M/s Think and Learn Private Limited and the company's business operations.

Based on this, the ED conducted searches at the premises of Think and Learn Private Limited and Byju Raveendran's residence on April 27th and 28th, 2023 and documents related to significant foreign remittances outside India and investments received by the company were seized. During the course of investigation by ED, statements from Byju Raveendran and the CFO of Think and Learn Private Limited were recorded during the investigation regarding alleged contraventions of FEMA, 1999 and potential loss of revenue to the Government of India.

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