Byju's, once among the most valued edtech start-ups in the world and a darling of investors during the Covid-19 pandemic, has seen a dramatic downturn in its fortunes after operational and financial setbacks in recent months. Experts say it marks a necessary correction in the bull run of Indian start-ups.
"Byju's is a company that has grown too fast too soon," says Shriram Subramanian, who heads an independent corporate governance research and advisory firm.
Founded in 2011, Byju's launched its learning app in 2015. With 15 million subscribers by 2018, the edtech firm became a unicorn (valued at $1bn) amid much fanfare.
It expanded substantially during the Covid-19 pandemic as students turned to online classes during lockdowns. But in 2021, it posted a loss of $327m, which was 17 times more than the previous year.
Since then, the edtech giant has witnessed an extraordinary unravelling. Valued at $22bn (£17.28bn) last year, Byju's has seen its valuation slashed to $5.1bn this year by Prosus NV, the company's biggest investor and shareholder.
The company did not respond to the BBC's queries.
"After the pandemic, when children returned to schools there was going to be a downturn," Mr Subramanian said. "But Byju's kept on growing and investors kept on putting money into it. They did not see the signs that there could be a downturn."
Aniruddha Malpani, an angel investor and vocal critic of Byju's business model, says the company had "paper fortunes".
"There's a big gap between value and valuation," he said.
With exponential growth during the pandemic, Byju's went on an acquisition spree in 2021, spending $2bn to acquire edtech start-ups and firms like WhiteHat Jr, Aakash, Toppr, Epic, and Great Learning.
It soon surpassed digital payments platform Paytm to become India's most-valued start-up.
Byju's channelled hundreds of millions into its marketing, roping in Bollywood superstar Shah Rukh Khan and football star Lionel Messi as its brand ambassadors. It became the main sponsor of the Indian cricket team and an official sponsor of 2022 FIFA World Cup.
But in recent months, the company has been dogged by complaints as parents accused it of not fulfilling its promises - coercing them into buying courses they couldn't afford and then not providing the promised services. Some also said that the firm used predatory practices to exploit customers.
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