Byju’s founder admits to strategic missteps amid financial struggles
text_fields
Byju Raveendran, the founder of India’s once highest-valued edtech firm BYJU’S, has publicly acknowledged that the company made several business miscalculations during its rapid global expansion.
Speaking to ANI, Raveendran said the push to enter 21 countries came in response to pressure from major global investors during the COVID era.
"When we tried expanding from India to the whole world, we made some business mistakes. Maybe we could have taken it a little bit slowly. We were growing a little too soon, too fast. We went from India to 21 new countries. But if you ask me, in that context of 2019 to 2021, the COVID era, we have 160 investors, world-class investors, and equity investors. All of them - this was the mandate: grow, grow, grow and change the way kids learn," said Raveendran.
BYJU’S, which reached a staggering valuation of $22 billion in 2022, is now grappling with a deep financial crisis. The founder explained that several critical investment deals collapsed due to external global events, including rising interest rates and geopolitical instability.
"We were raising money for growth at that time. But when the world changed—when interest rates went up, when Fed increased the interest rate and, almost simultaneously, the big war started, Russia and Ukraine—suddenly the liquidity dried up. 700 million of committed capital; signed committed capital didn't turn up," he said.
The company had based its acquisition strategy and future growth plans on the assumption that the committed funds would be received. However, as Raveendran noted, the promised capital never materialised, leaving BYJU’S in a liquidity crunch that has lasted nearly three years.
"So we were planning all these acquisitions and growth, assuming that all this money is coming. In fact, this was signed documents. There was no litigation. We didn't go and litigate those investors who backed out because of these external macro reasons. And from then onwards, and this is early 2022, and it's almost now three years, we have been struggling for liquidity. But fortunately, we had enough liquidity, which we made, and I have no regrets in terms of putting all that money back," he added.
Founded in 2015, BYJU’S initially targeted students from kindergarten to class 12. It entered the coveted "unicorn" club by 2019, achieving a valuation of over $1 billion, and later peaking at $22 billion. However, as of June 2024, investor Prosus slashed its valuation by 75%.
