Is Byju's a falling star? Investor doubt clouds edtech pioneer's future

Byju's, once a shining star in India's booming edtech landscape, is facing a severe downturn. The company's value has sharply decreased from its $22 billion valuation. This can be attributed to a complicated web of legal issues, financial hardships, and investor discontent.

The banking firm HSBC assessed Byju's stake held by investor Prosus at zero and expressed grave doubts about the company's viability. Byju's mounting issues include ongoing legal battles with lenders and fellow investors, a dire financial crisis, and a significant employee exodus.

Byju's mishandled effort to go public in early 2022 was the beginning of the company's fall from grace. This destroyed Byju's aspirations of a $40 billion valuation. Shortly after, the investment giant BlackRock gave a significant blow by lowering Byju's valuation to just $1 billion.

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The company's financial issues have recently gotten worse. The fact that Byju had to sell a $200 million rights issue at a 99 per cent discount prompted concerns about the company's fundamental value. In addition, a legal battle with the National Company Law Tribunal (NCLT) forced Byju's to escrow most of the funds raised.

Byju's has undertaken significant cost-cutting measures amid escalating problems. The company lowered the fixed salaries of new sales employees by 90 per cent and almost entirely linked their compensation to performance. The company's leadership problems have also been in the spotlight since Byju's CEO in India resigned.

It seems like a tough road ahead for the battered edtech pioneer as it facesseparate legal troubles in the US.