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Bottom line: Once a celebrated edtech company in India, Byju's serves as a stark reminder of how quickly fortunes can change in the high-stakes world of tech startups. It's a narrative that will likely be studied and debated in business schools and boardrooms for years.
In a dramatic fall from grace, Byju Raveendran, founder of Indian edtech company Byju's, has admitted to significant mistakes that led to the company's downfall. Speaking to journalists this week, Raveendran revealed that the startup, once valued at $22 billion, is now effectively worth "zero."
Byju's meteoric rise began during the COVID-19 pandemic, when demand for online education soared. The company expanded rapidly, acquiring over two dozen startups and entering numerous international markets. At its peak, investment bankers projected valuations as high as $50 billion for a potential IPO in early 2022.
Now, Raveendran, who no longer controls the company, acknowledges that this aggressive growth strategy proved to be the company's undoing. "We overestimated potential growth and entered too many markets at once. It was a little too much, too soon," he said.
The turning point came in late 2021 when global markets tumbled following Russia's invasion of Ukraine. The venture capital market spiraled downward, leaving Byju's in a precarious position. Raveendran claims that many of the company's investors, who had previously urged aggressive expansion, suddenly "ran away" when times got tough.
Reddit Ranks Byju Raveendran As The 'Worst Founder', Polls Sridhar Vembu As 'Best'https://t.co/g5gNUG2WOR
– ABP LIVE (@abplive) October 19, 2024
A critical blow came with the resignation of three key board members – representatives from Prosus Ventures, Peak XV, and the Chan Zuckerberg Initiative – who cited governance issues. This exodus, along with the departure of auditor Deloitte, made it nearly impossible for Byju's to raise additional funds.
A $1.2 billion term loan from U.S. lenders compounded the company's troubles. Initially seen as "the easiest capital," Raveendran now admits it became "the most expensive one." The loan default led to insolvency proceedings.
Despite these setbacks, Raveendran remains defiant. "I will make a comeback. By comeback, I do not mean that we will go back to being a $20 billion company but it means that we will continue with our mission," he said.
Raveendran also addressed allegations of fraud, firmly denying any intentional wrongdoing. "We've never done any intentional mistake; there's no fraud, and we've never siphoned any money. If there's fraud, founders will take money out, not put all their money in the company," he said. He is alleged to have of illegally transferred $533 million to offshore accounts.
The Byju's saga has sent shockwaves through India's startup ecosystem. Once hailed as a symbol of the country's tech prowess, the company's downfall has raised questions about the sustainability of rapid growth models and the role of investors in pushing for aggressive expansion.
As Byju's grapples with its uncertain future, the broader implications for India's edtech sector and startup landscape remain to be seen.
Raveendran's reputation is hopelessly tarnished, perhaps forever. The Reddit community Startup India has been conducting a poll to rank Indian startup founders. Reddit users unanimously chose Raveendran as the worst Indian founder, citing his mistreatment of employees, customers, and investors.
For now, Raveendran, who describes himself as a "hopeless optimist," is focused on salvaging what he can of his once-mighty edtech empire. "There is no problem in the world that can't be solved," he said.