Varsha worked as an investment banking analyst at Goldman Sachs before switching to journalism. She started off at Business India and later moved to Forbes India where she writes across industries and companies but has a bias towards startups, technology and the FMCG sector. She was a national level athlete and now enjoys running half marathons.
Byju’s, which was last valued at $22 billion and counts China’s Tencent and US hedge fund Tiger Global among its investors, has been battling multiple issues for a while now
Soon after news of Deloitte resigning as Byju’s statutory auditor and three board members also putting in their papers came to the fore, Arindam Paul, founder of fan manufacturer Atomberg Tech, tweeted, “Was very sad to see what is happening at Byju’s today.”
“Byju’s was the flagbearer of Indian tech and one of the most well-known Indian startups globally. If they fail, the India startup story in the eyes of global investors will have an impact,” he wrote, adding that he never thought the startup was so valuable and “detested” their “borderline unfair sales practices”.
India is home to roughly 400 funded edtech startups by some estimates, including unicorns like Byju’s, Unacademy, Upgrad, Eruditus, Vedantu and Physicswallah. At $6 billion it is the second largest market for e-learning after the US, and it’s expected to grow to $10.5 billion by 2025, according to Blume Ventures. The sector has roughly 18.5 million paid users across K-12, test preparation and skill development, which will balloon to 120 million by 2030, believes KPMG.
Will Byju’s downfall affect the sector in any way?
“To link the success or failure of the sector of one company wouldn’t be right,” says Anil Nagar, co-founder and CEO of Adda247, a local language learning platform backed by Google and Westbridge Capital. “Besides the opportunity is huge—barely five to 10 percent of India’s students have access to decent quality education. We’re at such a nascent stage of building out the market and testing out different business models. Some will work, some won’t. Indian edtech startups still have a long way to go.”
Byju’s, which was last valued at $22 billion and counts China’s Tencent and US hedge fund Tiger Global among its investors, has been battling multiple issues for a while now—including delayed financials, allegations of mis-selling, valuation drops, steep losses, layoffs and a bitter legal dispute in the US over a $1.2 billion term loan.
Even so, according to one investor in the space, the talk of Byju’s “brinkmanship” is far removed. “It will all finally get resolved because there is just too much money at stake. Of course, some unpleasant decisions may have to be taken, but I feel it’ll end with a kind of settlement with perhaps the founders remaining in charge, but with the investors having a greater say, pushing down harsher measures, etc.” The planned Aakash IPO, a physical tutor chain it bought for nearly $1 billion two years ago, might also eventually occur, which should provide some exits.
“So I don’t think anything will happen to the extent that Byju’s goes bust,” he adds. And even if it were to go under it should not affect the ecosystem as there is “enough depth, enough companies and enough excitement around India”.
Investors might look at startups more suspiciously, but that has been the case for some time now as the so-called funding winter still plays out across the ecosystem. Edtech in particular has seen a funding boom and slump: Up until 2019 in the pre-Covid period the sector saw $1.6 billion in funding across 307 deals. The period from 2020 to 2021 saw $6 billion in funding go to the sector, while 2022 to April 2023 saw funding plummet to $2.4 billion.
“This will continue for the next six months, but down the line things will normalise,” says Nagar. “Education is a big market and a big problem to solve for.”