Where is India’s Education Technology Giant Lacking?

The pandemic drove a boom in online education startups but now there is a lack of revenue projections

Private equity and venture capital investors in Byju’s, India’s most valuable education tech startup, took a break this week – the company is not listed yet. If that had been the case, the gyration of the markets would most likely seem to have caused some serious vertigo.

The Indian education technology company finally published audited financial statements for the year ended March 2021 on the 21st of September, after an 18-month delay. Losses soared, but revenue was nearly flat at the equivalent of US$304.6 million – a bad surprise as Indian ed-tech companies saw massive user growth as schools closed for the pandemic.

In an interview with TechCrunch, Byju’s founder Byju Raveendran said some 40% of FY21 revenue because of the period of consumption and credit sales duration were deferred to the subsequent year.

The startup said it generated gross revenue of US$1.258 billion (unaudited) in the financial year that ended in March this year. Between April and July, the startup logged revenue of $570 million, it said. Byju’s counts Prosus Ventures, Chan Zuckerberg Initiative, Sequoia Capital India, Silver Lake, Owl Ventures, UBS, and Blackrock among its backers and has raised nearly $6 billion to date.

Byju’s has been scrutinized for delays in postings its audited results, making international headlines. Raveendran said despite the scrutiny, the startup has demonstrated fast growth, and other than WhiteHat Jr, a kids-focused coding platform it acquired in 2020, all major properties of Byju’s including the physical education chain Aakash and Great Learning that it has purchased in recent years haven’t witnessed any reversal in growth even as schools opened up.

Layoffs and Inflation

The recent layoffs, however, have experts worried that the sector was in a bubble all along, which is finally bursting.

“In the pandemic, this industry saw a boom. But now they have to refocus and change their business model,” Eldho Mathews, deputy advisor with the unit for international cooperation at the National Institute of Education Planning and Administration (NIEPA), a research-focused university in New Delhi, told Rest of the World. “Edtech industry will grow as a support mechanism. But it cannot be a replacement for classrooms.” Mathews believes ed-tech startups should have predicted the slowdown after the pandemic dwindled.

The startup, which is valued at over US$22 billion, has also postponed its plan of going public this year. Raveendran said Byju’s is watching the macro market conditions closely and will file for an IPO in nine to 12 months. “I don’t think the markets will turn this year,” he said.

Byju’s is also looking to close a new funding round within weeks, he said. The startup is in the advanced stages to raise funding from sovereign funds that are looking to double down, he said. The company has made a bid to acquire U.S. ed-tech firm 2U, he confirmed.

Raveendran, a former teacher, said there has been plenty of misreporting about the company’s business in recent months. He said the startup, for instance, has paid most of the money for the US$1 billion Aakash acquisition to investor Blackstone, and for the remaining sum, the two have mutually decided to process the payments later.

He confirmed, however, that the startup has yet to receive US$250 million from Sumeru and Oxshott committed to participate in a funding round earlier this year.