Byju’s hasn’t raised money for a while, but the estimates of its current valuation are falling off a cliff.
Byju’s has approached existing shareholders to raise $100 million via a rights issue at a valuation of $500 million to $1 billion, ET reports. At its peak Byju’s was India’s most valuable startup with a valuation of $22 billion. A rights issue at $500 million would thus mean a staggering 97.7 percent erosion in the company’s value over the last two years.
Byju’s is reportedly “desperately” scouting for funds to keep operations running. The company needs this money as an immediate lifeline, but even at this lowered valuation, most of the early investors it has approached with the proposal for fresh fundraising have refused to invest, a source said. “They feel there are too many unknowns surrounding the way the company is being run under founder Byju Raveendran … Nothing has been officially put out there or notified,” they added. Byju’s also finally revealed its long-pending FY22 results yesterday, which showed that the company had registered a loss of Rs. 8,245 crore.
Byju’s has seen its valuation plummet in recent times. In March 2023, Prosus had valued Byju’s at just $5.1 billion, and in November, it had valued Byju’s at less than $3 billion. Two weeks ago, BlackRock has valued Byju’s at $1 billion. With the company now considering a rights issue at a $500 million valuation, Byju’s appears to have seen its valuation fall even further.
This is a dramatic unravelling for Byju’s, which at one point was India’s highest-valued startup. The coronavirus pandemic had had caused investors to pump into into the company, and Byju’s saw its valuation soar. But even as it was snapping up companies both in India and abroad, cracks had begun to appear. Byju’s had delayed filing its FY21 financial results for so long that even the Indian government commented on the issue. The results hadn’t made for pretty reading — Byju’s had lost Rs. 4,588 crore in FY 21 — and Byju’s had then proceeded to lay off thousands of employees. Around this time, questions had been raised in Indian parliament about Byjus’ alleged mis-selling of courses to economically vulnerable parents, and even the country’s child rights body had summoned CEO Byju Raveendran for questioning.
But things kept getting worse — not long after, the Enforcement Directorate had raided CEO Byju Raveendran’s home, and seized incriminating documents over violation of foreign exchange laws. Since then, Byju’s has seen its valuation marked down by several investors, and the company had tried to restructure its loan obligations. Byju’s had then been sued by its lenders, but it had gone on to sue them back and refused to pay back its loans amounting to $1.2 billion. Not long after, 3 of Byju’s board members had resigned in unison over concerns over its corporate governance , and a day later, its auditor, Deloitte, had also resigned. The ED had also issued the company a show-cause notice for contravening FEMA guidelines to the tune of Rs. 9,000 crore, and the company had been taken to NCLT court by BCCI over missed payments of its team India sponsorship which it had eventually transferred to Dream11.
It’s hard to think of a company that’s been buffeted by worse news in recent times. But less than two years after it was India’s highest valued startup, Byju’s appears to have lost 97.8% of its value, and is staring at the bottom of the barrel mired in valuation markdowns, legal proceedings, and visits from the Enforcement Directorate. And with the company now no longer even commanding a unicorn valuation, Byju’s whirlwind last few years appear to have finally come a full circle.