Once-feted, edtech firm Byju’s is now facing legal showdowns. Earlier this week, the company was admitted to insolvency by the National Company Law Tribunal (NCLT). What does this mean for the edtech sector, employees and investors? Mint explains:
So, what happens to Byju’s?
Byju Raveendran, the maverick founder who held a tight grip on Byju’s, will lose control of the firm to an interim resolution professional (IRP). The IRP will begin the process of forming a committee of Byju’s financial creditors, and subsequently hand over control to them. Raveendran now stares at a tight deadline to settle with the Board of Control for Cricket in India (BCCI), India’s powerful cricket board, out of court. The BCCI dragged Byju’s to the bankruptcy court for default worth ₹158 crore. If creditors take over, the firm’s fate will lie in their hands. Byju’s has now appealed to an appellate tribunal.
How are other edtech players doing?
Other edtech companies have also been going through a tough time, having overspent to grow during a funding boom in 2021. Some companies, including Byju’s, went in for aggressive acquisitions, which backfired. Unacademy, the second most valued edtech company in India, saw a string of top-level exits. It is in conversation with other online education firms for a possible merger, media reports have stated. Yet other edtech companies such as Vedantu have also resorted to a cost-cutting spree, letting employees go, amid a funding scarcity. Many firms, such as Lido, Frontrow and Udayy, have shut operations.
How does it impact employment in the sector?
The future of Byju’s 10,000-odd workers in India will depend on the outcome of the bankruptcy proceedings. Ex-employees, who were sacked over the past two years, can claim unpaid dues to the resolution professional. Across Indian edtech firms, teaching jobs and compensation are likely to be impacted. And the infamous poaching war for educators is set to cool.
Is this good news for offline learning?
Over the past year, edtech companies that held the torch for online learning, have increasingly moved offline. Test preparation firms like PhysicsWallah and Unacademy have forayed offline, increasing competition for incumbents like Allen Career Institute. While traditional offline players might have benefited from Byju’s fall, the development coincides with falling enrolments in major coaching hubs like Kota. Students are migrating to branches in smaller cities.
What now for edtech investments?
With slowing demand for online education and losses at edtech startups, investors have grown cautious. Once the poster-child of for startup funding, investments in edtech have been declining since the end of 2022. Between Jan and Jun 2024, edtech raised $150 mn, down 37% from $237 mn a year ago, data from Tracxn showed. Byju’s troubles have further dented investor confidence in the sector, especially in the K-12 and test prep markets. But investors remain bullish on the higher education and upskilling segments.