Byju’s debacle a big blow to startup spirit
Once valued at $22bn, edtech major raised $6.3bn in 28 rounds of funding involving 61 investors, 23 lead investors
image for illustrative purpose
Byju Raveendran now has few options left to try and salvage a company. One option to appeal the decision, and may halt the insolvency proceedings if he gets stay order
Startup Saga:
- NCLT admitted bankruptcy proceedings against Byju’s
- Interim Resolution Professional (RP) has been appointed
- Byju Ravindran was replaced by RP
- The court also invited other creditors, Byju’s employees and vendors to file claims
- It owes Rs159 cr to BCCI
Mumbai: Byju’s, once India’s most valued unicorn, is now heading to insolvency.The Bengaluru bench of National Company Law Tribunal (NCLT) allowed bankruptcy proceedings to begin against the edtechfirm and appointed an interim resolution professional to replace the founder Byju Raveendran, following a petition by Board of Control for Cricket in India (BCCI),one of its creditors and the country’s powerful cricket governing body. The tribunal, which delivered its verdict on Tuesday, also invited other creditors, Byju’s employees and vendors to file claims. The insolvency professional will now run the high-profile startup.
Byju Raveendran now has few options left to try and salvage a company that ranked among the world’s most valuable internet startups at its peak. Think and Learn Pvt. Ltd, which owns Byju’s,
Can appeal against the decision. If it gets a stay order, insolvency proceedings against it will stop.
When an education firm, which transformed from a startup to a multi-investor funded conglomerate once valued at $22 billion, uses a popular film star as its brand ambassador and sponsors the most popular sports in the country, which is cricket, before going bust, it has got all the ingredients as a masala potboiler. And Byju’s was exactly this
Founded in 2015, Byju’s saw its business ever growing during the Covid-19 pandemic within the country and even in abroad. But it was not the case to be once the pandemic started subsiding and the company started facing severe jolts owing to legal wrangles and financial issues.
Raveendran’s firm, once a poster child for India’s burgeoning startup sector, is one of several once-lionized tech firms that have since been hit by financial or legal troubles.
The ‘existence of a debt and a default in the payment of debt is clearly established’, the NCLR said in its decision, adding it found no reason to deny the petition filed by the cricket body. The cricket board said Byju’s owed it Rs159croe ($19 million).
But for now, insolvency professionals described the likely road ahead: the appointed caretaker will reach out to Byju’s vendors and creditors and will form a committee of creditors to determine a future course of action.
The panel could include holders of a $1.2 billion term loan, which a US unit of Byju’s defaulted on and thus caught in a complicated legal case. Byju’s said that it is still hopefulof settlingthe issue with the cricket body.
Talking to Bizz Buzz, Arun Kejriwal a market expert and founder of KRIS, says: “Using peer pressure and socio-economic pressure to enroll students and the backlash they faced because of sale were some of the issues that they couldn’t manage.” At one time, Byju’s was India’s most valuable startup what with 28 rounds of funding, 61 investors, 23 lead investors and$6.3 billion raised in all.
“But if Byju’s shuts down, it is a big loss for Indian employees, entrepreneurs, vendors, customers, even the BCCI. This is not a happy day for Indian enterprise or our economy,” says another market expert Ajay Bagga.
