Recently tech investor firm Prosus has written off the fair value of its 9.6% stake in Indian edtech Start Up firm Byju’s during the financial year 2024.
Prosus cited due to the significant decrease in value for equity investors they had to write off 99.6% stake and $493 million was recognized in other comprehensive income during the year, Prosus added in its annual report.
Prosus’s stake in the online tutor company Byjus was estimated to be worth about $2 billion just two years ago, when Byju’s was riding a peak valuation of $22 billion.
Few years ago the Dutch investment firm Prosus first backed Byju’s six years ago, before the edtech firm got famous with the title as India’s most-valuable start-up.
In 2015, the company launched Byju’s learning app, which catered to students from kindergarten to class 12 and 2019, Byju’s had become India’s first ed-tech unicorn.
The start-up valued at over $1 billion but down the line within 6 years we witnessed how Byju’s failed to live upto investors’ expectations and the company.
Top Investors threatened to take of stakes of and investors wanted more clarity and oversight on the funds amid alleged mismanagement by the company’s founders.
This makes the Dutch firm the first to fully write-off its investment in the troubled start up.
Byju’s was once India’s most promising start up, valued at $22 billion in 2022.
Continuous financial, legal and operational problems have eroded almost all of its valuation. And Byju’s is still struggling with governance and cash-flow problem.
Reason Dutch Investment Firm Prosus ‘write off’ 9.6% Stake in Edtech Byju’s
- After a rapid expansion during the Covid pandemic, Byju’s has been struggling with cash-flow problems
- This was starting blow to the start up as it embroiled in a dispute with creditors over a $1.2 billion loan.
- The company expanded beyond capability as workforce was not there trained to meet customers demand.
- Allegations of a toxic work culture and immense pressure on employees to acquire more customers.
- Byjus wanted to be on top and adopted aggressive marketing tactics.This led to financial mismanagement that played significant role in the company’s downfall.
- Sponsorship of major events and celebrity endorsements strained its financial standings, leading to a $1.2 billion loan default in 2021.
