BlackRock, a major asset manager, has made a substantial reduction in the estimated value of its stake in Byju’s, an Indian edtech startup. The latest disclosure by BlackRock indicates a significant decrease from the startup’s valuation of $22 billion in early 2022 to approximately $1 billion. In comparison, at the end of October the previous year, BlackRock had valued Byju’s shares at approximately $209.6 each, translating to a valuation of $990 million.

BlackRock’s Byju stake is now approximately $1 billion

This valuation had already experienced a decline from the peak of $4,660 in 2022. This markdown in valuation is part of a broader trend, with other investors also revising their assessments of Byju’s. Prosus, holding around 9% in Byju’s, declared a valuation of “sub $3 billion” in late 2023. Notably, Byju’s, once lauded as India’s most valuable startup at $22 billion, has undergone a dramatic reversal of fortune. The startup garnered attention by strategically spending over $2.5 billion in 2021 and 2022 to acquire more than half a dozen firms globally.

However, its valuation skyrocketed to as high as $50 billion, largely driven by optimistic assessments from prominent investment bankers. Backed by various industry players such as Peak XV Partners, Lightspeed, UBS, and Chan Zuckerberg Initiative, Byju’s successfully raised over $5 billion in equity and debt over the past decade. Byju’s had ambitious plans to go public in early 2022 through a SPAC deal, potentially valuing the company at up to $40 billion. Unfortunately, the geopolitical event of Russia’s invasion of Ukraine in February disrupted markets, compelling Byju’s to postpone its IPO plans.

Byju’s IPO aspirations to its financial struggles

As market conditions deteriorated, so did Byju’s business outlook. Investors began exerting pressure on the company to address unresolved issues. Presently, Byju’s is grappling with a series of challenges that are impacting its financial health and overall stability. The company is facing difficulties in securing capital, meeting payroll obligations, and settling debts exceeding a billion dollars. It fell short of its revenue target for the financial year ending in March 2022, as disclosed in a delayed account report.

Moreover, Byju’s experienced a significant shakeup in its leadership with the departure of CFO Ajay Goel in less than seven months, who returned to Vedanta in late October. This followed the abrupt exits of auditor Deloitte and three key board members in June. In July, Prosus publicly criticized the Bengaluru-based startup, accusing Byju’s of insufficient evolution and disregarding investor advice despite repeated attempts. These setbacks have collectively contributed to the current predicament of Byju’s, once considered a shining example in the Indian startup ecosystem.

The drastic reduction in valuation by BlackRock, along with similar actions by other investors, raises concerns about the long-term viability and financial health of Byju’s. The company’s inability to proceed with its planned IPO amid market uncertainties and subsequent challenges in fundraising underscores the volatile nature of the startup landscape, even for once high-flying entities like Byju’s. As the edtech industry faces evolving dynamics and increased scrutiny, Byju’s will need to navigate these challenges strategically to regain investor confidence and stabilize its financial position.