BlackRock, one of the major investors in Byju’s, has cut the value of its holding in the Indian edtech startup by over 90%, reflecting the loss of confidence in Byju’s by its investors.
BlackRock, the US asset manager and one of the major investors in Byju’s, has slashed the value of its holding in the Indian edtech startup by over 90%, according to disclosures made by the asset manager. The latest disclosure by BlackRock revealed that it now values Byju’s at around $1 billion, a steep drop from its previous estimate of $990 million in October 2023.
BlackRock’s move is not an isolated case but rather part of a wider trend of markdowns by other investors who have lost faith in Byju’s. Prosus, the Dutch internet conglomerate that holds about 9% of Byju’s, declared a valuation of “sub $3 billion” for the startup in late 2023. This was a significant downgrade from its earlier valuation of $16.5 billion in June 2022, when it led a $350 million funding round for Byju.
Other backers of Byju’s, such as Peak XV Partners, Lightspeed, UBS, and Chan Zuckerberg Initiative, have also reportedly revised their assessments of the startup, reflecting the deteriorating market conditions and business outlook for Byju’s.
Byju’s, founded in 2011 by Byju Raveendran, a former teacher and engineer, rose to fame by offering online courses and test preparation for students in India and abroad. The startup leveraged its strong brand recognition and user base to acquire more than half a dozen firms globally, spending over $2.5 billion in 2021 and 2022 alone.
Byju also attracted the attention of prominent investment bankers, who projected its valuation to soar as high as $50 billion, making it one of the most valuable startups in the world. Byju’s had ambitious plans to go public in early 2022 through a SPAC deal, potentially valuing the company at up to $40 billion.
However, these plans were dashed by the geopolitical event of Russia’s invasion of Ukraine in February 2022, which triggered a global market turmoil and forced Byju to postpone its IPO plans indefinitely.
As the market sentiment turned sour, Byju faced increasing pressure from its investors to address the unresolved issues that plagued its operations and finances. The startup is currently grappling with a host of challenges that are threatening its survival and stability.
One of the main challenges is in securing capital, as Byju has burned through most of its cash reserves and accumulated debts exceeding a billion dollars. The startup has also failed to meet its revenue target for the financial year ending in March 2022, as revealed in a delayed account report.
Another challenge is the significant shakeup in its leadership, with the departure of CFO Ajay Goel in less than seven months, who returned to Vedanta in late October 2023. This followed the abrupt exits of auditor Deloitte and three key board members in June 2023.
A third challenge is the growing discontent among its existing investors, who have publicly criticized the startup for its lack of innovation and disregard for their advice. In July 2023, Prosus issued a scathing statement, accusing Byju of being “stuck in the past” and “ignoring the changing needs of the customers and the market.”
These challenges and setbacks have collectively contributed to the current predicament of Byju, once considered a shining example in the Indian startup ecosystem. The startup now faces an uncertain future as it struggles to regain its lost glory and credibility.
