Byju’s Seeks Fresh Funding Amidst Valuation Drop Below $2 Billion
Buju’s, one of the most popular education platforms working across the globe, is now looking for funding as it is currently valued at less than $2 billion. Although the previous evaluation of the company has measured the figures up to $22 billion, the new outcomes have exhibited a decline of 90%. There are several reasons behind this breakdown of the EdTech startup based in Bengaluru. Byju’s is making its way to new funding of $200 million after increasing it from $100 million. Moreover, the CEO and co-founder of this education platform, Byju Raveendran, is also expected to invest in the new funding. So that he will be able to retain his share in the company.
Background of the Valuation Drop
Byju’s was launched in 2015, and since then, it remained the top education application in India because of its popular and exciting teaching methods. The signed tutors deliver the lectures in a very unique way by using the concepts of real-life objects. For example, they give examples of pizza or cake to make the lectures more interesting and enjoyable. Based on such immense popularity, the company has gained exceptional revenue over the years and has become a giant in the EdTech world.
In the last decade, the company has generated more than $5 billion in equity. Additionally, it has spent over $2.5 billion to acquire more than 6 organizations across the globe in 2021 and 2022. Despite being so successful, Byju’s has been struggling financially for the past few months. The core challenges of this high-end educational enterprise are capital raising and payroll making. Furthermore, the debts of more than a billion dollars are still pending.
The Funding
In 2022, Byju’s has planned to go public with the help of a SPAC deal, which had the potential to increase the value of the company up to $40 billion. However, Russia invaded Ukraine at the start of February, which caused the markets to shut down. Hence, Byju’s has to put its IPO plans on hold.
Previously, Byju’s was in the final stages of its funding round, led by BlackRock, and is expected to raise $400 million. However, the amount is not invested in the startup as the auditor Deloitte and three other board members withdraw their hands. Instead, the company has ended a funding round, directed by Davidson Kempner, to raise about $150 million, and it had to repay the full amount to the investor.
The new funding round will depict BlackRock which will cut its values of holdings in Byju’s. Consequently, it will slash the current valuation of the Indian EdTech company.
Implications
Byju’s is currently going through its worst financial state. Nevertheless, the company has all the resources to overcome its challenges. Also, it is backed by numerous giant enterprises including the likes of the Chan Zuckerberg Initiative, Lightspeed, UBS, and Peak XV Partners. Based on this, the owners are hopeful to come out of the crisis as soon as possible.
