Byju’s, the once-untouchable Indian edtech giant, has hit rock bottom. Its largest investor, Prosus, has effectively given up on the startup, writing off its 9.6% stake as worthless. But don’t count out the embattled startup just yet – Prosus is still holding out hope that Byju’s can be resuscitated, but only if it cleans up its act and gets its governance in order.
Prosus, which has poured over $500 million into Byju’s, has seen its investment evaporate due to the startup’s catastrophic financial and governance failures. The writing was on the wall when Byju’s failed to meet financial reporting deadlines and ultimately reported revenues less than half of what it had projected. And things only got worse from there – the startup’s auditor and board members, including a Prosus executive, abruptly quit, scuttling a potential $1 billion fundraising effort. In a desperate bid for capital, Byju’s raised a paltry $200 million investment this year, but at a drastically reduced valuation of about $225-$250 million. This lifeline has since become embroiled in legal disputes with some of Byju’s largest backers, including Prosus.
Byju’s has gone from being India’s most valuable startup to a laughingstock, its valuation plummeting from a staggering $22 billion to almost nothing. And it’s not just Prosus that’s lost faith – BlackRock, the world’s largest asset manager, has also written off its stake in the Indian edtech startup. Prosus has been at odds with Byju’s, complaining that the startup has “regularly disregarded advice” from it. But even as the startup’s prospects seem bleak, Prosus remains hopeful that Byju’s can still be salvaged – if only it can get its act together and stop hemorrhaging value.
Prosus, which has a reputation for investing in high-profile startups like Tencent, Delivery Hero, Swiggy, and Stack Overflow, has seen its other investments take a hit as well. Stack Overflow, which it bought for $1.8 billion, saw a 39% markdown, while its stake in Indian online pharmacy PharmEasy decreased by 35%. The group’s readjustment of Byju’s stake is a stark reminder that even the most vaunted startups can fall victim to poor governance and financial mismanagement.
The question on everyone’s mind is: can Byju’s be rescued? Only time will tell. But one thing is certain – the startup’s once-mighty valuation is now nothing more than a distant memory, a cautionary tale of the perils of unchecked ambition and poor leadership.
Update: Prosus has written off its stake in Byju’s, but the startup’s largest investor still holds out hope that it can be salvaged. But with its valuation plummeting to almost nothing, it’s hard to see how Byju’s can recover from its catastrophic financial and governance failures.
The article has been updated to reflect the latest developments in the Byju’s saga.
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