🤯 The $1.2B loan that killed BYJU'S

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Today at a Glance:

• ☠️ 1 Failed Startup → BYJU’S

• ⚠️ 2 Mistakes → Over-leveraging with $1.2B loan

• 🧠 3 Lessons Learned → Build governance like a fortress (not a favour)

• 🔗 The Runway Insights → 4 principles to cold-email billionaires (and get responses)

• 💰 Southeast Asia Funding Radar → AI Hay raises $10M (Series A) to deliver hyperlocal, intelligent, and accessible AI tools to 100 million Vietnamese

📚 The Good Old Days

• Oct 2011 — Think & Learn was founded by Byju Raveendran and his wife (Divya Gokulnath) in Bengaluru.

• Aug 2015 — 📱 The BYJU’S Learning App was launched, offering animated video lessons and interactive quizzes for K–12 students.

  • Achieved 2 million downloads in 3 months.

• 2018 — 🦄 BYJU'S became India's 11th unicorn with a $1 billion valuation.

🛍️ The Acquisition Spree

• Jan 2019 — 🛒 Acquired U.S.-based Osmo (children’s AR learning games) for $120M.

  • This complemented its app with a blended learning hardware product.

• Aug 2020 — 🛒 Bought coding-teaching startup WhiteHat Jr for $300M.

  • At this point BYJU’S was already valued around $10–11B and aggressively expanding.

• Jul 2021 — 🛒 Acquired U.S. children’s reading app Epic! for $500M and Singapore’s Great Learning (upskilling platform) for $600M.

  • The company had by now raised over $5B from investors and was valued at ~$16–17B.

• Nov 2021 — Took $1.2B term loan (the beginning to the end).

• Jan 2022 — 💰 Raised a roughly $800M funding round (including founder’s contribution) at about a $22B valuation.

  • It announced plans for an IPO (later shelved).

  • Had 150M+ registered users.

📉 From $22B to $0 (BYJU’S → BYE’S)

• Nov 2022 — ⚠️ Growth slowed. BYJU’S missed deadlines to file audited results for FY2021.

  • As schools reopened after COVID-19, demand for online learning declined, but BYJU'S couldn't adapt their business model quickly enough.

  • The Indian corporate affairs ministry sent a letter about the delay.

  • Employees began speaking out about workplace issues.

• 2023

  • Mar — Lenders issued default notice on the $1.2B term loan.

  • Jun — 🚨 Suddenly, auditor Deloitte resigned, citing “long-delayed” financial statements.

    • 3 independent board directors (from Sequoia India, Chan Zuckerberg Initiative, and Naspers Ventures) resigned (why?), leaving the founder’s family in full control again.

    • BYJU’S had raised ~$5B and spent $2.5B on M&A by this point.

  • Apr — 🚨🚨 India’s Enforcement Directorate raided BYJU’S offices in a probe of alleged foreign-exchange (FEMA) violations.

    • The searches cited billions of rupees of FDI and overseas remittances.

  • Nov — 🚨🚨🚨 The ED issued a show-cause notice accusing BYJU’S of roughly $1.1B in FEMA breaches.

    • BYJU’S finance chief resigned. Auditors and investors publicly criticised management.

    • BlackRock marked BYJU’S valuation down from $22B to ~$1B.

• 2024

  • 23 Jan — 🩸 Behind the scenes, the finances were grim. BYJU’S had sky-high cash burn and no profits. According to its FY2022 audited results (filed after a 22-month delay):

    • 🟢 Revenue → ₹5,298 crore ($692.5M)

    • 🔴 Loss → ₹8,245 crore (1.08B)

  • 1 Feb — 💀 BYJU’S U.S. subsidiary filed for Chapter 11 bankruptcy in Delaware court.

    • The filing listed $1–10B in liabilities.

    • Media reported the parent was once valued at $22B but recent rounds implied ~$1–3B.

    • The company also launched a $200M rights issue (stock offering) to raise cash but that effort got caught in court and frozen (see below).

  • 23 Feb — 🪑 At an emergency shareholders’ meeting (EGM) in India, investors (Prosus, Peak XV, etc.) voted to remove founder Byju Raveendran as CEO and overhaul the board.

    • Byju contested the vote’s validity, but the governance battle was on.

    • Thousands of employees were laid off, and the company struggled just to pay salaries and vendors.

  • Mar — 🤯 Lenders in the U.S. declared BYJU’S default on a $1.2B loan.

    • U.S. hedge funds took control of BYJU’S subsidiary Aakash Education (test-prep business) after loan covenants were breached.

    • In the U.S. Alpha bankruptcy case, creditors alleged BYJU’S diverted $533M of the $1.2B term loan (huh?).

    • 🚨 $533 million vanished — allegedly funnelled to a shady Miami hedge fund, Camshaft Capital, run by a 24-year-old from an IHOP restaurant.

  • 13 June — 🥶 India’s National Company Law Tribunal halted BYJU’S second rights issue (by court order) amid legal battles, freezing its valuation at roughly $25 million (versus $22B earlier).

    • The fundraising faltered amid allegations of mismanagement by minority shareholders.

  • July — 😵 BCCI (cricket board) filed for insolvency against BYJU’S over unpaid sponsorship fees (~₹158 crore).

    • NCLT Chennai admitted the plea (though BYJU’S later settled and the hearing was withdrawn).

    • BYJU’S parent Think & Learn formally entered the corporate insolvency (CIRP) process.

  • Oct — 💀 India’s Supreme Court overturned an NCLT settlement, sending BYJU’S back into insolvency.

    • Founder Raveendran publicly laments that after all the legal fights “it’s worth zero”.

• Feb 2025 — 💸 U.S. creditors sued BYJU’S founders in Delaware bankruptcy court, accusing them of fraudulently transferring $533M of loan funds to a mysterious hedge fund.

  • In India, the new CFO noted BYJU’S wiped out months of fundraising with unpaid salaries and liabilities.

• June 2025 — 🥲 In a Delaware bankruptcy auction, BYJU’S sold key U.S. assets at steep losses:

  • Epic (acquired for $500M) fetched only $95M

  • Tynker (acquired for $200M) just $2.2M.

  • HSBC declared Prosus’s investment “worth zero” amid the turmoil.

  • Meanwhile, BYJU’S promoters appealed insolvency orders in India’s Supreme Court, while the battle with the Cricket Board and creditors drags on.

🌮 Key Takeaways:

• 📕 Have an integration playbook for post-acquisition

  • Before writing a big cheque, run a 3‑month proof‑of‑concept with shared KPIs (e.g., churn rate, MAU uplift).

  • Dedicate a cross‑functional team (product, marketing, finance) to merge tech, brand, and culture within 90 days.

  • Unacademy, a major BYJU’S competitor, acquired Kreatryx (test‑prep) but spent six months syncing curriculum and branding, leading to a 20% bump in paying users — without derailing core operations.

• 🤑 Business model with positive unit economics

  • BYJU’S shifted from a focused, high-margin SaaS model (K-12, test prep) to a sprawling “ed-tech conglomerate” with no clear profit engine.

  • In India, where price sensitivity is high and margins are thin, this is a recipe for disaster.

  • Focus on your core, expand adjacently, and always track unit economics.

🌮 Key Takeaways:

• 💪🏻 Empower your board (seriously)

  • Recruit independent directors with spine.

  • Hold regular board meetings where tough questions are asked (and answered!).

  • Treat investor directors as partners, not obstacles.

• 🤝🏻 Transparency is non-negotiable

  • Implement robust, timely financial reporting systems from Day 1.

  • Use standard accounting software, hire a strong CFO early, get audited on time. No excuses.

• 🪑 Independent board seats

  • Always maintain at least 2 non‑founder, non‑investor directors empowered to request audits, probe financials, and veto major decisions.

  • By contrast, upGrad (an Indian competitor in upskilling) has a 5‑member board with 3 independents who meet monthly — keeping financials tight and avoiding “audit surprises.”

🌮 Key Takeaways:

• 🔄 Build feedback loops with your users

  • Watch engagement, NPS, and churn like a hawk.

  • When you see a shift (e.g., post-COVID drop in online usage), experiment rapidly with new models — hybrid, offline, B2B partnerships.

  • For example, Vedantu and Unacademy quickly launched hybrid models and partnered with schools when online-only demand softened.

  • But BYJU’S still stuck to its old playbook and paid the price.

• 🦄 Build offline-online synergies EARLY

  • Don't wait for a crash. If your core is online, explore asset-light offline partnerships (tutoring centres, school integrations) or targeted physical centres only where unit economics make sense.

  • If you're offline (like Aakash), integrate tech meaningfully to enhance the experience, not just bolt it on.

🔗 The Runway Insights

• 4 principles to cold-email billionaires (and get responses) (Link)

• Your complete guide to discounting (Link)

• The brand that turned water into $1.4 billion (Link)

• Stop rushing to resolve two competing objectives (Link)

• 5 interesting learnings from Chime at $2 billion ARR (Link)

• The $4.6T Services-as-Software opportunity: Lessons from year one (Link)

💰 Southeast Asia Funding Radar

• AI Hay raises $10M (Series A) to deliver hyperlocal, intelligent, and accessible AI tools to 100 million Vietnamese (Link)

• Elfie raises $12M for free digital super app to manage chronic diseases (Link)

• Rebee raises $1.18M (Seed) to scale their digital physiotherapy platform (Link)

• Monit raises $2.5M to help SMEs manage spending with AI (Link)

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