In a dramatic turn of events, BlackRock has dealt a severe blow to the struggling edtech firm by marking down Byju’s valuation by 95% to a mere $1 billion. This staggering drop comes as the latest in a series of setbacks for Byju’s, once hailed as India’s most-valued startup, in which BlackRock was an early investor in Byju’s.
In a regulatory filing with the US Securities and Exchange Commission on January 5, BlackRock announced a third Byju’s valuation markdown, including its parent company, Think & Learn. The implied valuation now stands at approximately $1 billion, plummeting from the zenith of $22 billion achieved during the last fundraising round in October 2022.
This drastic reassessment by BlackRock, the world’s largest asset manager, underscores the growing skepticism surrounding Byju’s business model. The edtech giant, facing an industry-wide slowdown, has witnessed a substantial correction in its valuation, raising questions about the company’s future viability.
Valuation History: From Pinnacle to Abyss
The Byju’s valuation rollercoaster began last year when Prosus and Peak XV Partners initiated markdowns, placing the company’s worth below $3 billion. Having initially valued Byju’s at $8.2 billion in March 2023, BlackRock has further slashed this figure to $1 billion, reflecting a downward spiral from $4,660 per share in 2022 to $209.57 in the recent quarter.
The beleaguered edtech company, grappling with a decline in operations and founder Byju Raveendran’s challenges in securing new financing, is selling assets like Epic and Great Learning to alleviate its financial woes. Negotiations continue with lenders over the terms of a $1.2 billion Term Loan B raised in November 2021.
Investor Pressure and Operational Turmoil
Investors, including Prosus, have demanded audited financial results for 2022-23 before committing fresh capital, adding to the mounting pressure on Byju’s. Founder Raveendran, facing calls to step aside from day-to-day operations, acknowledged a cash crunch, assuring senior employees that relief should come within 45-60 days.
Byju’s is battling financial setbacks and grappling with regulatory scrutiny. Alleged violations of the Foreign Exchange Management Act have prompted notices from the Indian Enforcement Directorate. Moreover, delayed financial reporting and accusations of misselling courses have added to the company’s woes.
Byju’s is not alone in its struggles, as other Indian startups, including Swiggy, Pine Labs, and PharmEasy, have faced valuation markdowns. However, a shift is visible, with Swiggy, Pine Labs, and Meesho experiencing valuation markups in recent months, signaling a potential change in investor sentiment within the industry.
Uphill Battle for Byju’s
As Byju’s navigates through financial turbulence and investor skepticism, the once-revered edtech giant faces an uphill battle. BlackRock’s substantial markdown is a stark reminder of the challenges confronting not just Byju’s but the broader startup sector, prompting industry observers to closely monitor the company’s next moves in a rapidly evolving landscape.
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