Paul Yeung / Bloomberg
BlackRock, the global asset management giant, has dramatically cut its valuation of Indian edtech startup Byju’s to approximately $1 billion, a steep decline from its early 2022 valuation of $22 billion. This adjustment, not previously reported, marks a significant downturn for Byju’s, with BlackRock’s valuation of Byju’s shares plummeting from $4,660 to about $209.6 each by October last year.
This valuation cut is not an isolated incident for BlackRock, which owns less than 1% of Byju’s. Other major investors have also downgraded Byju’s valuation, with Prosus valuing the company at “sub $3 billion” late last year. Byju’s, once the crown jewel of India’s startup ecosystem and valued at up to $50 billion by investment bankers, has witnessed a dramatic reversal in its fortunes.
The startup, known for its innovative tutoring methods using real-life examples, has been a magnet for significant investments, raising over $5 billion in the last decade from a roster of influential backers including Peak XV Partners, Lightspeed, UBS, and the Chan Zuckerberg Initiative. However, Byju’s ambitious expansion, marked by over $2.5 billion spent on global acquisitions in 2021 and 2022, has not translated into sustained growth.
The company’s challenges were further exacerbated by market disruptions following Russia’s invasion of Ukraine in February 2022, derailing Byju’s plans for a $40 billion valuation through a SPAC deal. As market conditions deteriorated, Byju’s faced increasing pressure from investors to address longstanding issues, leading to mounting difficulties in raising capital, meeting payroll, and managing over a billion dollars in debt.
The financial year ending March 2022 saw Byju’s missing its revenue targets, as revealed in a delayed account. This period also witnessed the departure of CFO Ajay Goel after less than seven months, along with the exits of auditor Deloitte and three key board members in June. Prosus, a significant investor, publicly criticized the Bengaluru-based startup in July for insufficient evolution and ignoring investor advice.
Byju’s current situation reflects a challenging phase for the once-celebrated startup, grappling with operational hurdles and a changing investment landscape, underscoring the volatile nature of the tech startup ecosystem.
