Will 2024 be any different than Byju’s year of challenges?

BENGALURU: The year 2023 has not turned up well for Indian start-ups – none more so than Byju’s, the marquee name in the Indian start-up and Unicorn space. The edtech company, which was not so long ago seen as a testament to the success of India’s start-up ecosystem, has seen it all during the year –investigation for FEMA violation, large-scale layoffs, defaults and mass exodus at the top.

And as the year draws to a close, the Byju Raveendran-founded firm is now facing a new challenge – the Board of Control for Cricket in India (BCCI) filing an insolvency petition against the erstwhile sponsor of Indian cricket team. Though every now and then founder Byju Raveendran held shareholders meetings and took steps to keep employee morale up, edtech experts and analysts say these challenges show sheer inability in reading the situation and taking timely corrective action and cutting the cash drain.

On December 5, about 50 leaders attended an interactive leadership huddle and Byju Raveendran himself discussed five challenges that the company faced in 2023. We list here the five challenges faced by the company.

Litigation over Term Loan B

The firm secured a $1.2 billion term loan in November 2021. It went on an acquisition spree and lenders have been demanding for a full refund. This challenge, according to Byju Raveendran, could be resolved post the sale of Epic, a subsidiary of Byju’s in the US.

Byju’s has been trying to sell US-based digital reading platform Epic that it acquired in July 2021 for $500 million. Previously the company had acquired Osmo for $120 million, WhiteHat Jr for $300 million, Aakash for about $1 billion. It also plans to sell Great Learning, a professional learning platform that it acquired for about $600 million. According to Tracxn, the company has made 19 acquisitions so far and nine acquisitions in 2021 alone.

“As a keen observer of Byju’s, I was unable to understand the strategic intent behind their acquisitions. For example, the company was built for disrupting classroom teaching and making high quality coaching possible to a wider audience through online. If this was the core business purpose, it baffles me when Byju’s buys out Aakash,” says Ganesh Mahadevan, Partner, Thinksynq.

This exact business is what Byju’s was going after originally. Did they do it because their core business was not gaining traction or they just wanted to build a topline quickly by buying out the large legacy player. If it is the former then the very purpose for which Byju’s was built is shaking and if it is the latter, lazy short-term thinking,” adds Mahadevan.