The significant valuation markdown of Byju’s by Prosus NV, a leading tech investor, marks a notable shift in the edtech sector. Prosus has reduced the valuation of the Indian education firm to under $3 billion, a dramatic decrease from its peak valuation of $22 billion in the previous year. This downward revision reflects a significant 86% decrease from its highest valuation. The decision was disclosed by Ervin Tu, the interim CEO of Prosus, during their earnings call. This latest valuation cut follows a series of setbacks for Byju’s, including the departure of several executives and board members, a delay in filing its financial results for 2021/22, and issues related to governance and cash-flow.
Prosus, which has invested $536 million in Byju’s since 2018, has progressively adjusted the valuation over the past year, marking it down to $11 billion in March, $8 billion in May, and $5 billion in June. In June, the valuation of Prosus’s investment in Byju’s was revalued to $493 million, reflecting an 8% decline. This latest markdown adds to the challenges faced by Byju’s, which has been a leading company in the edtech space. Byju’s has experienced turbulence in the past year, including mass layoffs, top-level attrition, and investigations by crime-fighting agencies for alleged violations of FEMA regulations.
Byju’s, headquartered in Bengaluru, has also faced issues such as delayed publication of financial results and debt challenges. The startup is looking to sell off entire business lines to raise cash. Byju’s CFO and chief technology officer have recently quit, and the company is under investigation by India’s Enforcement Directorate for alleged forex law violations amounting to $1.12 billion. Despite these challenges, Byju’s, which counts among its investors firms like General Atlantic, Silver Lake, Blackrock, and the Chan Zuckerberg Initiative, has raised over $5 billion to date.
Prosus, one of Europe’s most valuable tech companies, includes Byju’s and Pharmeasy among its “large underperformers.” The net asset value of Prosus’s e-commerce portfolio, featuring fintech, edtech, food delivery, and venture deals, was valued at $29 billion at the end of the first half of the financial year 2024, down from $50 billion during the same period two years ago. However, not all investments by Prosus in India are underperforming; the firm highlighted the positive prospects of its payments company PayU and the strong growth of the food delivery startup Swiggy.