In an astonishing turn of events, Byju’s, once celebrated as India’s most valuable startup with a valuation of $22 billion, is now deemed worthless according to a recent research note by HSBC. This dramatic decline marks one of the most shocking downturns in the startup world, casting a shadow over the future of the edtech industry.
HSBC’s Zero Valuation: The Breaking Point
HSBC’s research note assigned a zero value to the nearly 10 percent stake held by investment company Prosus, valued at approximately $500 million. The note highlighted multiple legal challenges and a severe funding crunch as primary reasons for this drastic reassessment.
Previously, HSBC valued the stake with an 80 percent discount to the latest publicly disclosed valuation. However, the mounting legal battles and financial struggles have led to a complete write-down. “Byju’s is facing multiple headwinds. We and other shareholders are working every day to improve the situation. We are in close discussions with the company every day,” a senior Prosus executive commented.
A Rapid Descent from Grace
The downfall of Byju’s has been swift and brutal. In early 2022, the company was gearing up to go public through a SPAC deal that could have valued it at up to $40 billion. However, the dream quickly turned into a nightmare. In January 2023, US-based investment firm BlackRock slashed the value of its holding in Byju’s from $22 billion to a mere $1 billion. BlackRock’s stake in the company is less than 1 percent.
Legal Troubles and Financial Instability
Adding to the woes, a group of lenders recently petitioned against Byju’s US subsidiary’s new entities in a US court, alleging non-payment of debts. This legal trouble has only exacerbated the company’s financial instability.
Byju’s rapid ascent and even faster descent serve as a cautionary tale in the startup ecosystem. The company’s inability to manage its finances and legal issues has led to a complete erosion of its market value, leaving employees and investors in a state of uncertainty.
The Rise and Fall of an Edtech Giant
The once-thriving edtech firm, founded by Byju Raveendran, revolutionized online education in India, becoming a household name. However, its recent troubles underscore the volatility and risks associated with high-growth startups. As Byju’s navigates through these turbulent times, the entire startup community watches closely, hoping for a turnaround but bracing for more fallout.
What do you think went wrong for BYJUS?? Also, will other edtech companies also fail like BYJUS? WHAT ARE YOUR VIEWS???
