What Edtech Startups Can Learn From Crises Surrounding Byju's Controversies engulfing Byju's has led to many edtech startups rethinking the way they operate. In fact, Byju's itself is course-correcting its way of functioning by learning from its mistakes

In a piece of important news last week, edtech giant Byju's said that it plans to cut around 5,500 jobs to decrease costs amid a restructuring of its business. It was reported by the Economic Times, which also said that Arjun Mohan, who took over as the chief executive of the company's India business, has briefed senior executives that he would be merging several business verticals as part of the changes to be rolled soon.

This doesn't come as a surprise, considering the issues the company has been facing in the recent past. In fact, the edtech unicorn has seen the maximum highs and lows over the years, more than any startup in India. And, this has come as a learning for many startups, especially those in the edtech sector. In fact, Byju's itself has changed its way of functioning and working on its mistakes.

Byju's: The past, present and future

Byju's was at one time valued at $22 Bn. It was also considered one of India's biggest success stories. And, its journey from offering CAT classes for Common Admission Test (CAT) training in 2008 to turning India's first edtech unicorn in 2018 was remarkable. Here is a brief timeline of the same:

• 2008 – Byju Raveendran started BYJU's CAT classes for CAT training
• 2009 – Started online video-based coaching for CAT
• 2011 –The company was registered as Think & Learn focusing on the K-12 segment
• 2012 – Awarded one of the fastest growing tech companies in India under Deloitte Technology Fast 50 India
• 2013 – The startup raised $9 million from Aarin Capital in a Series A round
• 2015 – Raised $25 million in Series B round led by Sequoia Capital
• 2015 – Launched Byju's learning app
• 2015 - Within 3 months of launch, more than two million students came on the app
• 2016 – Raised $75 million in a Series C round led by Sequoia Capital and Sofina
• 2016 – Secured Series D round of $50 million from Chan Zuckerberg Initiative
• 2016 – Series E round of $15 million led by International Finance Corporation
• 2017 – $30 million in Series F from Verlinvest, at an alleged valuation of $600 million.
• 2017 – Acquired TutorVista and Edurite, valuation reportedly increased to around $670 million
• 2017 – Earned INR 260 crore in revenues last fiscal year and aimed profitability
• 2017 - Actor Shah Rukh Khan roped in as brand ambassador
• 2018 – Turned India's first edtech unicorn
• 2019 - Massive expansion in terms of students, courses and reach

During the pandemic, the edtech unicorn further got a massive boost. The uptick seen in the edtech space due to the shutting down of schools and colleges, helped it flourish like never before. The company took this time as an opportunity to strengthen its core and expand to allied services with an array of buyouts. In fact, since its inception in 2011 till 2021, Byju's spent over $2.6 billion on acquisitions, says data from Tracxn. But, the majority of these deals such as Aakash, Scholr, Epic, Toppr, Great Learning happened after the onset of the Covid-19 pandemic, which gave the startup entry into segments such as higher education and professional education.

However, post the pandemic, after the reopening of educational institutions, things have topsy turvied for the edtech unicorn. It has been engulfed with one problem after another for the last two years. Some latest controversies include the search and seizure operations conducted at three premises in Bengaluru by the Enforcement Directorate under Foreign Exchange Management Act (FEMA) with regards to money laundering. The searches reportedly revealed that the edtech startup had received foreign direct investment of around INR 28,000 Cr between 2011 to 2023 and remitted INR 9,754 Cr to various foreign jurisdictions during the same period.

Byju's also reported a loss of INR 4,588 crore for the fiscal year ending March 31, 2021, which was 19 times greater than the previous fiscal.

Moreover, many well-known personalities also started sharing their thoughts on the edtech company, its culture and the style of running the business. "I'd called out Byjus when they came to my house trying to sell programs that my daughter did not need during the pandemic. They tried to convince her that she was poor academically in order to make an extra buck. I had to drive them out of my house. I was trolled for mocking the so-called rags-to-riches story. I had to delete my tweets because of the abuse. As their house of cards begins to collapse it's time to remind ourselves that not all rags-to-riches stories are stories of honest intentions and legitimate wins," film-maker Hansal Mehta said in a tweet.

However, now, Byju's is course-correcting its way of functioning by learning from its mistakes. For instance, in July this year, the company announced that former SBI chairman and current BharatPe chairman Rajnish Kumar and ex-Infosys CFO Mohandas Pai have joined the edtech company's advisory council. The new appointments came after the startup's three major investors, Peak XV Partners, Prosus and Chan Zuckerberg Initiative–resigned from the board.

''Rajnish Kumar and TV Mohandas Pai have accepted their invitation to join the company's newly constituted Advisory Council. This council will play a pivotal role in advising and mentoring BYJU'S board and CEO Raveendran, on crucial matters that shape the company's future,'' said a statement released by BYJU'S.

The company is on the path to set right the problems by taking some more key decisions. For instance, it has decided to cut down its employee count by 3,000 to 3,500 this month. Some of the other things, as shared in a recent PTI report, are below.

• The company plans to adopt an enterprise-wide consolidation and organizational restructuring.
• It also plans to hive off Epic, its US-based children's book reading app, as part of its cost-cutting measures.
• The news agency reported that it also plans a settlement of the outstanding $1.2 billion loan
• The edtech giant has set a target to reach break-even by March 2024.
• "Think and Learn Private Ltd (TLPL) restructuring will see the current operations spread across several business units streamlined into four core areas of K-12, test prep, online and hybrid. The business restructuring, aimed at matching resources with cash flows, will see the company achieve break-even by coming March, in fourth quarter of current fiscal," PTI quoted a source as saying.
• "Besides fundraise, the company plans to focus restructuring and consolidation of 31 entities under it to optimise management bandwidth," PTI quoted a source as saying.

Issues surrounding Byju's has also led to many startups rethinking the way they operate. Experts say that edtech startups should learn from Byju's mishap and focus on scaling the right way.

What edtech companies should focus on

India's edtech sector was valued at $750 million in 2020 and is supposed to reach $4 billion by 2025 at a CAGR of 39.77 percent, making it one of the fastest growing sectors in the country. However, things didn't go the way it was expected post the pandemic. "People have started to adopt to offline mode for education and hence there is stress on sales and edtech companies will see a drop in sales volume with offline getting started," said Anil Joshi, managing partner, Unicorn India Ventures, in an earlier interview.

Also, unlike food or grocery ordering or even watching movies at home, offline play is still crucial for edtech startups. "Parents have realized that children were zoning out faster in online classes and were looking forward to offline classes. So, edtech was a short-term phenomenon," said Pearl Agarwal, founder and managing director, Eximius Ventures.

Some experts also say that there is an inherent flaw in the business model and edtech businesses need to keep in mind a lot of things when scaling, to avoid such mishaps. Experts also opine that edtechs need to focus on building hybrid education models rather than pure online, which was the trend during covid.

"Most of the edtech went overboard in scaling the online business and post covid when the trend changed they were already in a position where the sudden application of brake would have overturned their fast-moving vehicle and this is what happened with almost all major edtech including unicorns like Byju. This scaling business without consolidation in between is what creates these challenges, like what happened with byjus and other similar companies," said Milan Sharma, founder and MD, 35North Ventures.

Edtech is also an impact-oriented sector, and therefore the goal should be improving students' lives and eventually profits will follow, say experts. "In scaling an edtech business, it's vital to remember that success isn't just about growth metrics, but the lasting impact you create in students' lives. Providing quality education to the user should always be at the heart of what you do. This must define all activities of the business, whether it be a new product, feature or program - whether it is simple and will truly improve student's learning or not," said Jairaj Bhattacharya, MD and co-founder, ConveGenius Group.

He also added that apart from this, one must build a sustainable model, maintain fiscal discipline, and monitor key metrics like revenue and user retention.