Investment behemoth Prosus has devalued the edtech giant Byju’s to less than $3 billion, a significant drop from the $22 billion valuation the Indian startup achieved early last year. Byju’s is grappling with numerous challenges, prompting Prosus and other supporters to collaborate in assisting the Bengaluru-based startup in its recovery efforts, according to Ervin Tu, Prosus’s interim chief executive, during an earnings call following the release of financial results for the six months ending in September.
The steep 86% write-down in Byju’s valuation aligns with the startup’s restructuring initiatives and cost-cutting measures following substantial losses incurred during the pandemic-induced growth surge. Byju’s, having raised over $5 billion to date and backed by investors such as Peak XV, Lightspeed India Venture Partners, Sofina, BlackRock, UBS, and Chan Zuckerberg Initiative, fell short of its revenue target for the fiscal year ending in March last year, as disclosed in a recently delayed account. The startup is currently addressing a $1.2 billion debt issue and navigating an investigation by India’s Enforcement Directorate for alleged violations of forex laws amounting to $1.12 billion.
Byju’s experienced significant leadership changes, including the departure of CFO Ajay Goel, auditor Deloitte, and three key board members. In July, Prosus criticized the startup for insufficient evolution and a disregard for investor advice. Prosus, which holds over a 9% stake in Byju’s, has been actively adjusting the valuation of its holdings for more than a year, initially valuing Byju’s at $5.1 billion at the end of March.
Prosus, a prominent European tech company, identified Byju’s and Pharmeasy, an Indian online pharmacy startup, as “large underperformers.” The net asset value of Prosus’ e-commerce portfolio, encompassing fintech, edtech, food delivery, and venture deals, dropped to $29 billion at the end of the first half of the 2024 financial year, down from $50 billion two years prior, with the internal rate of return (IRR) decreasing from 18% to 5%. Despite these challenges, Prosus highlighted positive developments in India, with its payments company PayU aiming for an IPO in the second half of 2024 and robust growth reported by leading food delivery startup Swiggy.
