The fall of Byju’s: Lessons from an EdTech giant’s rapid rise and decline

Byju’s, once celebrated as India’s most successful edtech startup, has gone from being a beacon of innovation to a case study in overexpansion and mismanagement. The company, led by founder Byju Raveendran, experienced meteoric growth, fueled by aggressive acquisitions and billions in venture capital funding. 

However, its recent financial troubles, legal controversies, and loss of investor confidence have cast a shadow over its legacy. This article explores Byju’s rise, its strategic missteps, and what entrepreneurs can learn from its dramatic fall.

The vision that ignited Byju’s

Byju Raveendran founded Byju’s in 2011, inspired by his passion for teaching and mathematics. A teacher-turned-entrepreneur from Kerala, Raveendran initially conducted offline coaching sessions for competitive exams. His ability to simplify complex topics resonated with students, and his classes quickly gained traction.

In 2015, Byju’s transitioned to a digital-first approach with the launch of its mobile app. Combining visually appealing videos, interactive lessons, and gamified quizzes, the app disrupted traditional learning. By 2020, the COVID-19 pandemic accelerated the adoption of online education, positioning Byju’s as the face of India’s edtech revolution. By 2021, the company had over 150 million users globally and reached a staggering valuation of $22 billion.

The acquisition spree that backfired

Byju’s growth strategy was built on aggressive acquisitions, but these purchases became a double-edged sword.

WhiteHat Jr.: Acquired for $300 million in 2020, WhiteHat Jr. aimed to teach coding to young children. However, it faced backlash for exaggerated claims in its advertising, such as students landing lucrative jobs at tech giants. Despite the promise of innovation, the platform struggled with high costs and mounting criticism, making it a financial burden.

Aakash Educational Services: In 2021, Byju’s acquired this traditional test-preparation giant for nearly $1 billion. The move was initially lauded as strategic, blending offline coaching with digital tools. While Aakash brought profitability, it also highlighted Byju’s overreliance on debt financing.

Epic! and Osmo: Byju’s spent $500 million on Epic!, a US-based digital reading platform, and $120 million on Osmo, an educational gaming company. These acquisitions were part of its global expansion efforts but failed to generate expected returns.

Great Learning and Others: To tap into the professional upskilling market, Byju’s acquired Great Learning for $600 million. While strategic, the integration challenges added to the company’s woes.

By 2023, the cumulative costs of these acquisitions, combined with operational inefficiencies, began to outweigh their benefits.

A financial empire on shaky ground

Byju’s raised over $5 billion from prominent investors, including Sequoia Capital, Tencent, and the Qatar Investment Authority. At its peak, the company was valued at $22 billion. However, its financial health began to deteriorate:

• In FY2022, Byju’s reported losses of ₹8,245 crore, the highest ever for an Indian startup.
• By 2023, investors like Fidelity slashed its valuation to $5.1 billion, reflecting a sharp decline in confidence.
• The company defaulted on a $1.2 billion loan, triggering insolvency proceedings for its US subsidiary.

Controversies that shattered trust

Byju’s faced a series of scandals that compounded its troubles:

Marketing and Ethical Concerns
WhiteHat Jr. became infamous for misleading ads, while Byju’s aggressive sales tactics for its app led to complaints from parents about pressure to buy expensive subscriptions.

Legal Scrutiny
India’s Enforcement Directorate (ED) accused Byju’s of violating foreign exchange laws involving ₹9,362 crore. The raids damaged the company’s reputation further.

Leadership Crisis
Founder Byju Raveendran reportedly urged an ally, William Hailer, to flee the US to avoid testifying against the company in a bankruptcy case. This led to a referral to federal prosecutors, further tarnishing Raveendran’s image.

Mass Layoffs
Cost-cutting measures resulted in thousands of employees losing their jobs across acquisitions, sparking criticism about poor workforce management.

The broader impact of Byju’s fall

Byju’s troubles have reverberated across multiple stakeholders:

Students: With disruptions in services, students and parents are concerned about continuity in their education.

Employees: Thousands of employees, particularly in WhiteHat Jr. and other subsidiaries, have faced layoffs.

Investors: Once bullish on India’s edtech sector, investors are now wary, causing funding challenges for other startups.

What could have been done differently?

Byju’s downfall offers crucial lessons for startups and founders:

Sustainable growth over aggressive expansion
The company overestimated the long-term demand for online education post-pandemic. A more measured approach, focusing on core strengths, could have reduced financial strain.

Transparent financial practices
Byju’s failure to file timely financial statements and reliance on debt financing eroded investor trust. Greater transparency and fiscal discipline might have alleviated concerns.

Cultural and operational integration
Many of Byju’s acquisitions struggled with integration, leading to inefficiencies. A slower, more deliberate approach to mergers could have ensured better alignment.

Ethical marketing
Misleading claims and aggressive sales tactics alienated customers. Building trust through honest advertising might have helped sustain long-term goodwill.

What do we think about the entire soiree 

Byju’s journey from a pioneering edtech giant to a cautionary tale highlights the risks of unchecked ambition. While the company transformed education for millions, its aggressive expansion and governance lapses proved its undoing.

The recent allegations against Byju Raveendran, urging an ally to avoid legal scrutiny, underscore the desperation within the company’s leadership. Founders must recognize that rapid growth is not a substitute for sustainable practices and ethical governance.

The fall of Byju’s serves as a lesson to startups: success requires not just innovation but also accountability, transparency, and a clear focus on long-term sustainability. For Byju’s, the road to redemption will be steep—but not impossible, should it commit to rebuilding trust.

About The Author