The Rise and Fall of Byju

Himanshu Sharma
FE – 07133
Report on the key factors that contributed to the downfall of
Byju's, a prominent EdTech company, and what lessons can be
drawn from its decline.
September 03, 2023
The Rise and Fall of Byju’s

Once hailed as the poster child of the Indian educational technology indus
try, Byju's is a unicorn revolutionizing online education with its innovative
products and services.
Byju's was started in 2011 by couple Byju Raveendran and Divya Gokulnat
h who wanted to make learning fun and engaging for students. They start
ed with offline tutorials and later developed an app that provides video tut
orials and interactive quizzes. The app is popular with students and parent
s who appreciate its quality and efficiency.
Byju caught investors who poured millions of dollars into the company in a
short time.
Byju's also went on a buying spree, acquiring other edtech startups such a
s WhiteHat Jr and Aakash Education Services to expand its services and off
erings. Byju's became the world's most valuable edtech startup in 2020 wi
th an investment of $22 billion.
But behind the scenes, things are not as they seem. Byju strayed from its
core mission of providing quality education and instead focused on selling
hardware devices such as tablets and laptops to students and parents, oft
en using sales harshly and unfairly. Chapter
One parent named 'Economictimes.com' complained that when they reject

ed their products and services, they received messages like 'Your daughte
r will lose as much as you and guilty you will feel
for trying to prevent her from succeeding in life'. They can't afford it.
Byju's is also working on strict accounting practices to increase its revenu

e and valuation. The company delayed publishing its annual financial state
ments for the year ended March 2021, receiving scrutiny from officials and
investors.
The company also uses questions such as selling the money it receives to
third parties and recording income.
Byju's faced a liquidity crunch and credit default. The company borrowed
heavily from a variety of sources, including banks, private equity firms and
venture capital funds, to finance its growth and acquisitions. However, he
was unable to generate enough cash to pay off his debt on time. In 2021, i
t defaulted on a $300 million loan from Singapore-based Redwood Global I
nvestments fund.
It also renewed the terms of another $500 million loan from the same fund
, but defaulted again in 2022.
Byju has lost the trust of its auditors and shareholders in its board of direc
tors. In June 2023, Deloitte, one of the world's top audit firms, promptly re
signed from Byju's audit position, citing long-standing and unresolved fina
ncial issues. Deloitte's decision casts doubt on the reliability and integrity
of Byju's financial reporting process. At the same time, three board memb
ers representing Prosus, Sequoia Capital and Chan Zuckerberg Initiative h
ave resigned from the board of Byju's Think & Learn Pvt Ltd.
(BYJU'S) expressed disappointment with the company's culture and directi
on.
Byju is facing legal problems and reputational damage. Byju's was sued by
Redwood Global Investments for breach of contract and fraudulently misre
presenting the loan. The case is pending in the Singapore High Court. Byju
's has also faced numerous complaints and lawsuits from customers, empl
oyees and competitors regarding its products, services and practices.
These conflicts have damaged the company's image and market value.
One thing that shocks me is that Byju borrowed Rs 2000 from Davidson Ke
mpner Capital Management, an American investment firm, yes even thoug
h they defaulted on their current loans. I must admit that Davidson is one
of the best experts to have fought for it.
What can we learn from Byju's

story?
Byju's story shows how a promising educational technology startup can go
wrong by ignoring its core mission and values, seeking growth without ben
efiting everyone, affecting quality and morale, and ignoring the warning si
gns of financial stress.
Byju's story also shows some important points that every startup should r
emember:
1. It was a hardware company, not a technical service. It is a mistake that

undermines Byju's core values and misleads its customers. Edtech startup
s should focus on delivering quality education services and solving real pr
oblems for students, not selling devices that won't add much value or mak
e a difference.
2. Uses solid budgeting methods. Bringing Byju to the attention of manage
ment and compliance is a dangerous move. Edtech startups should follow
transparent and ethical accounting standards to reflect their financial perf
ormance and position, rather than using numbers to motivate investors or
derive value.
3.
It suffered a series of setbacks and defaults on loans. This is a sign of poor
financial management and planning. Edtech startups should have healthy
cash and debt ratios and avoid using excessive leverage or borrowing bey
ond their means. There should also be contingency plans in case of unfore
seen events or business shocks.
4.
He lost the trust of supervisors and board members. This is the result of p
oor management and communication. Edtech startups should have good g
overnance, with independent and talented members who can provide over
sight and guidance. In addition, auditors must communicate regularly and
honestly with investors and other stakeholders and address questions or c
oncerns in a timely and efficient manner.
5.
He faced legal problems and reputational damage. This is the result of poo
r customer service and unethical behavior. Edtech startups should respect
and care about their customers and provide quality products and services
that meet their expectations and needs. They must also adhere to ethical
and legal standards and refrain from any behavior that could harm their re
putation or property.
6.
Byju shows that one of the main reasons for business failure is motivation.
This is the root cause of many of the problems Byju faces. He allegedly ign
ored feedback and suggestions from employees, customers, and investors
and refused to acknowledge or correct his mistakes.
It was also reported that the company sold millions of dollars worth of stoc
k because it had financial problems. Edtech startups deserve humble, visi
onary and responsible leaders who foster trust, trust and innovation amon
g teams, partners and customers.
As professionals and students in educational technology, we must be awar
e of these lessons and not repeat Byju's mistakes.

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Himanshu Sharma

The Rise and Fall of Byju’s

One parent named 'Economictimes.com' complained that when they reject

Byju's is also working on strict accounting practices to increase its revenu

What can we learn from Byju's

1. It was a hardware company, not a technical service. It is a mistake that

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