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Five Major Reasons for Byju's Downfall

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Once valued at $22 billion, the Indian edtech company Byju's has fallen to below $2 billion today. When Byju Raveendran, the founder of the company, began with ambitious plans to disrupt the Indian edtech industry, a question annoyingly follows: what went awry that led to the initiation of insolvency proceedings? We will comprehend this in today's blog. 

Massive Expenditure on Advertising

The company's aggressive expansion plan and financial ignorance were highlighted. It ventured into foreign countries without studying demand and competition. This was costly and a failure. The company threw money at the wall on useless advertisements. Byju did not conduct cost-benefit analyses for major sponsorships and celebrity endorsements. Instead, they looked for sponsorships and deals. This was significant because poor financial decisions reduced revenue and increased debt. They were spending too much, which left them with less cash and higher costs to run the business. Looking at the company's financial data, in 2021, the operating revenue was ₹2280 Cr and the total expenses were ₹7027 Cr. This led to a total loss of ₹4564 Cr.

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Poor Management

BYJU'S encountered problems in many areas where management capabilities were either not up to par or not up to par in terms of effective management capabilities. The company couldn't always meet deadlines in project management. BYJU'S lack of effective project management practices hindered their ability to respond to customer requirements as they changed over time quickly. Skills gaps, high rates of turnover, and lacking in diversity occurred because the company was unable to source good employees and retain them. The ability of BYJU'S to innovate, implement plans, and stay ahead was affected.

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Negative Publicity

Byju did not prevent user data theft and observe government rules regarding data even after it received severe criticism owing to the problems of breach of data privacy. Users do not like to hear after knowing that the private information is leaked or mishandled and this hampered the popularity of the firm as one of the best sites to have knowledge. This firm fell into disrepute when not-so-good incidents happened here, and they were bound to be more skeptical as well.

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Aggressive Growth

When the Covid pandemic started, Byju's saw a chance to push online learning and invested heavily in marketing. Their business grew a lot from March 2020 to October 2020. They bought many ed-tech startups, not only in India but also in the US, as they tried to grow quickly. Some of the companies they acquired included WhiteHat Jr. and Great Learning. The WhiteHat Jr purchase was a billion dollars. This debt put Byju's on debts that went over $1.2 billion, way more than it could make to pay them back. It supported the Indian cricket team, the Football World Cup, and even made football star Lionel Messi a global ambassador when COVID-19 hit. But growth has slowed since classes resumed, and the company's problems have worsened because of the long legal fight that seems to be getting more intense.

Read more Case Studies at Corporate Chronicals

BCCI’s Legal Move

BCCI asked tribunal to initiate the insolvency proceedings against Byju’s for defaulting of $19 million of dues related to sponsorship rights for the Indian cricket team’s jersey. Despite Byju’s expressing a desire to settle the matter, the tribunal ruled in favour of cricket board, appointing a resultion professional and suspending Byju’s Board of Directors.

Read more Case Studies at Corporate Chronicals






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Location: New Delhi, Delhi, India

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