The once-celebrated Indian education technology company Byju's faces a critical juncture as it grapples with insolvency proceedings. Founded in 2011 by Byju Raveendran, the company's rapid ascent to a $22 billion valuation in 2022 has been followed by an equally dramatic fall, sending shockwaves through India's startup ecosystem.
Byju's, which gained prominence during the COVID-19 pandemic by offering online training courses, now finds itself embroiled in a dispute with U.S. lenders over $1 billion in unpaid dues. This financial turmoil has left its 27,000 employees in a precarious situation, with many going unpaid for months.
The company's troubles extend beyond its workforce. With services offered in 21 countries and a claimed user base of 150 million students, Byju's insolvency threatens to disrupt the education of countless learners globally. Programs typically priced between $100 and $300 are now in jeopardy, leaving parents concerned about recovering their payments.
Employees are weighing their options, with some considering street protests or legal action. Approximately 280 staff members have approached a state grievance panel, accusing the company of failing to remit taxes deducted from their salaries to the government. The uncertainty has led to the formation of WhatsApp groups where affected employees and parents discuss strategies to recover their dues.
The insolvency process, if it continues, could become the most significant among India's tech startups, a sector that has attracted major investors like SoftBank and Tiger Global. This development marks a stark contrast to the company's previous status as an investor darling.
Byju Raveendran, the founder and former billionaire, has attempted to reassure staff, promising prompt salary payments once control is regained. However, the road ahead appears challenging, with the company's board suspended and assets frozen.
The Supreme Court of India is set to hold its next hearing on August 29, 2024, as it allowed the insolvency process to continue last week, siding with the protesting U.S. lenders. This legal battle could potentially stretch for months, leaving employees and teachers uncertain about recovering their dues.
"A lot of people, including myself, have stopped taking classes because there's no point doing charity for the company anymore."
Byju's downfall is seen as a significant setback for the Indian startup sector. The company has faced numerous challenges in recent months, including boardroom exits, criticism over delayed financial disclosures, and an auditor resignation. Investors such as Dutch technology investor Prosus have accused Raveendran of mismanagement, allegations he denies.
As the situation unfolds, the fate of Byju's remains uncertain. The company's collapse could have far-reaching implications for India's startup ecosystem, serving as a cautionary tale for rapid growth without sustainable business practices. For now, thousands of employees, students, and parents anxiously await the outcome of this unprecedented crisis in India's EdTech sector.