Byju Raveendran, an Indian mathematics whiz who rose from teacher to startup billionaire, is now facing his toughest challenge yet. His education technology company, Byju‘s, has seen its valuation plummet from $22 billion to below $2 billion, and its future now rests with India’s courts.
| Year | Valuation |
|---|---|
| 2021 | $22 billion |
| 2023 | <$2 billion |
The 44-year-old founder recently lost control of the company as a tribunal began an insolvency process. Accused of “financial mismanagement and compliance issues,” Raveendran, from a family of teachers in a small South Indian village, now faces a reckoning.
The company’s troubles began when it failed to pay $19 million in sponsorship dues to India’s cricket federation. This led to the tribunal suspending Byju’s board and appointing a court-appointed restructuring expert to oversee the process.
An appeals tribunal will hold a hearing on Monday to decide if the insolvency process should be quashed. Raveendran argues that his company is solvent and that insolvency could lead to its shutdown and the loss of 27,000 jobs. This would also impact investors such as Dutch technology investor Prosus.
Raveendran denies any mismanagement or wrongdoing, though Byju’s has faced lawsuits over unpaid loans and public boardroom battles with foreign investors.
Despite his earlier success, Raveendran’s approach to crisis management has been described as “abrasive.” A former senior vice president of Byju’s mentioned that while Raveendran appeared “suave, nice and polished,” there was eventually a trust deficit. The executive noted, “He said things are improving, don’t worry, we have the money.”
Byju’s downfall is a dramatic turn for an entrepreneur who began his company in 2011 with physical classes. Raveendran, who aced a premier Indian management exam twice, started the business with his wife, Divya Gokulnath, a former student of his. The company saw massive growth, especially during the COVID-19 pandemic, when online teaching programs were in high demand. At their peak, Raveendran and his wife had a net worth of $4 billion.
The reversal of Byju’s success is attributed to Raveendran’s decisions to overrule associates, expand through expensive acquisitions, and spend heavily on marketing. This led to problems such as sales agents using aggressive tactics that damaged the company’s reputation.
Investors like General Atlantic, Prosus, and Mark Zuckerberg’s philanthropy venture backed Byju’s, which claims to have 150 million students in over 100 countries. However, Raveendran admitted to mistakes last year at the World Economic Forum in Davos, acknowledging that while growing fast, “we’ve made our fair share of mistakes.”
In an effort to turn things around, Raveendran made decisions to lay off some of Byju’s then-50,000 employees and reduce branding expenses to strengthen the company’s financial position.
| Year | Employee Count |
|---|---|
| 2021 | 50,000 |
| 2023 | 27,000 |
Raveendran and a Byju’s spokesperson did not respond to requests for comment.
Featured Image courtesy of The Edge Malaysia
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