Byju’s founder and CEO Byju Raveendran said on Monday that the startup was “at a sweet spot of its growth story where the unit economics and the economies of scale are in its favour,” after the edtech major landed a $250 million breather from its existing investors. This is surely a giant leap of faith, considering tightening purse strings and cooling investor interest amidst an economic downturn in the market and other adverse macroeconomic conditions.
Most of the capital raised in the latest bout of funding was provided by the Qatar Investment Authority (QIA), the sovereign wealth fund of Qatar.
The latest round of funding will keep the valuation of the Bengaluru-based Byju’s stable at $22 billion, maintaining its position as the most valued startup in India. The edtech major is confident about the path ahead, believing that 2022-23 will be the startup’s “best year in terms of revenue, growth and profitability,” and that the capital it will invest in its business will “result in profitable growth and create sustainable social impact.”
This development comes on the heels of a prior announcement by Byju’s, where the edtech decacorn had announced that it had “designed a path for profitability” that they planned to achieve by March 2023. This path included the consolidation of all its K10 India subsidiaries – Meritnation, TutorVista, Scholar, and HashLearn – under one umbrella, as well as the retargeting of marketing budget towards its overseas markets.
Lastly, Byju’s also plans to reinvent its sales model to focus more on inside sales, along with hiring 10,000 new teachers both for its domestic and overseas businesses.
It is a pity that the path of Byju’s to profitability includes laying off 5% of its workforce – which amounts to around 2,500 employees – across multiple departments. As the startup looks to improve its finances – something sorely needed after its dismal performance in FY21 – it will be giving many of the employees the boot in a phased manner (over a period of six months). Byju’s, for its part, had said that it was laying off the employees to avoid redundancies and duplication of roles.
It remains to be seen whether it manages to achieve its goals and become profitable within the period, thereby moving out of the turbulent waters it has recently found itself in. After several delays in announcing its audited financials, the edtech player informed that its net loss for the year had widened to nearly ₹4588 crores (a growth of 20 times), while it missed its own projections and clocked a drop in revenue.
