Key Points
Byjus, the edtech business, has become a poor advertisement for Indias once booming start-up sector that comprises over 80,000 registered entities, of which at least 70 per cent will eventually fail..
What used to attract attention earlier apart from its stratospheric valuations, which peaked at over $22 billion (not much lower than Tata Motors!) were its hyper-aggressive sales methods, its toxic work culture, its questionable accounting practices, and persistent doubts about whether what it offered actually delivered for students...
Flameouts are an inescapable part of this business (remember Educomp), so they get ignored in the booster-rocket stage of the game as private investors buy into even unreal valuations for fear of missing out, often insisting that company managements continue pursuing growth rather than profits...
In a sector that has absorbed investment over the past decade of over $150 billion (most of it being overseas money), new funding in the initial months of 2023 is down by some 80 per cent when compared to 2022...
For many companies, including Byjus, the promised turnaround is usually a couple of years away, while some promise operational profitability as an interim step which really means that the cash burn continues..
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