In a staggering turn of events, Indian edtech behemoth Byju’s, once heralded as a $22 billion titan, now finds itself valued at nothing, according to a recent research note by HSBC. This precipitous decline marks one of the most dramatic downfalls in recent startup history, as even BlackRock, a major investor in Byju’s, has written off its investment, aligning with HSBC’s bleak assessment.
Byju’s, headquartered in Bengaluru, has weathered a tumultuous period, witnessing a sharp departure from its glory days as India’s most valuable startup. Plagued by governance lapses and fiscal missteps, the company fell short of revenue projections by over 50% last year, exacerbating its woes. The abrupt exits of key personnel, including auditors and board members, further destabilized the firm, dealing a severe blow to its credibility and fundraising prospects.
The fallout from Byju’s woes reverberated throughout the investment community, with major stakeholders like Prosus publicly rebuking the company for disregarding counsel. Despite managing to secure a modest $200 million investment this year, valuing the company at a mere fraction of its former glory, legal disputes loom large as disgruntled investors contest the transaction. Notably, Prosus, with its substantial $500 million investment history in Byju’s, remains embroiled in the dispute, amplifying the uncertainty surrounding the startup’s future.
HSBC’s sobering assessment extends beyond Byju’s, underscoring a broader trend of dwindling valuations across several prominent startups. Pharmeasy, Meesho, DeHaat, and ElasticRun, once lauded as unicorns, have seen their valuations plummet amidst mounting challenges. Even acquisitions like Stack Overflow and GoodHabitz, previously touted as strategic victories, have suffered sharp valuation contractions, signaling a broader market correction in the edtech and SaaS sectors.
HSBC’s methodology, applying a conservative 50% discount to older funding rounds to reflect market corrections, paints a grim picture of the startup landscape. As the industry grapples with regulatory scrutiny, governance lapses, and funding uncertainties, the once exuberant optimism surrounding unicorns like Byju’s gives way to a sobering reality. With the fate of Byju’s and its counterparts hanging in the balance, the tech ecosystem braces for a paradigm shift, navigating the aftermath of a spectacular rise and an equally spectacular fall.
