Byju's faces setback as BlackRock slashes valuation by 95pc to $1 billion

BlackRock, the global asset manager, has taken a significant step by reducing the valuation of its stake in Indian edtech giant Byju's by 95 per cent, lowering it from $22 billion in early 2022 to a new valuation of $1 billion.

According to a TechCrunch report, the asset manager's disclosed adjustment, indicates a significant devaluation of Byju's, which once held the title of India's most valuable startup.

This markdown by BlackRock is the latest in a series of revaluations, with Prosus, another investor in Byju's, stating last year that it valued the startup at "sub $3 billion".

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The devaluation is a notable setback for Byju's, which was once hailed as a star in the Indian startup ecosystem.

BlackRock's disclosures reveal a sharp decline in the implied valuation of Byju's shares, from about $4,660 at its peak in 2022 to $209.6 per share at the end of October last year.

This drastic adjustment reflects the challenges faced by Byju's, once a high-flying unicorn.

The startup, which raised substantial funds and achieved a valuation as high as $50 billion, now grapples with financial hurdles, missed revenue targets, and an uncertain business outlook.

Byju's, backed by a roster of industry heavyweights such as Peak XV Partners, Lightspeed, UBS, and the Chan Zuckerberg Initiative, had ambitious plans for an IPO in early 2022.

However, external factors, including Russia's invasion of Ukraine in February, disrupted market conditions and forced Byju's to postpone its IPO plans.

The startup's challenges intensified as market conditions worsened, leading to increased scrutiny from investors and a halt in its business outlook.

Byju's, once lauded for its innovative teaching methods, is now dealing with difficulties in raising capital, meeting payroll, and addressing substantial debt obligations.

The departure of key personnel, including CFO Ajay Goel and auditor Deloitte, coupled with public criticism from investor Prosus, has added to Byju's woes.

The company's failure to evolve and heed investor advice has been a point of contention, contributing to its current struggles.