Byju's Faces Another Blow- Edtech's Fair Value Marked Down By 62%

In a significant development for the edtech industry, BlackRock, the world's largest asset management company (AMC), has announced a 62% reduction in the fair value of Byju's, the world's most-valued edtech startup.

This markdown marks the second time BlackRock has downgraded Byju's fair value since October 2022.

BYJU's Valuation in April 2023 Vs Valuation in March 2023

BlackRock, which holds less than 1% of Byju's shares, has estimated the value of its 2,279 shares at USD 4,043,471. This valuation suggests Byju's fair value to be approximately USD 8.4 billion as of March 31, 2023. In contrast, the AMC's filings with the Securities and Exchange Commission (SEC) indicated that Byju's valuation was over USD 22 billion in April of last year.

Adjustments to Fair Values Are Based on AMC's Internal Assessment

Additionally, BlackRock disclosed that it had sold shares in Byju's during the period covered by the filings. It is important to note that adjustments to fair values are typically based on an AMC's internal assessment of the macro and microenvironment, and do not necessarily indicate a permanent markdown in the overall valuation of the startup. Moreover, BlackRock's minority stake in Byju's limits its access to comprehensive information about the company's operations.

BYJU's Funding: USD 1 Billion Fund Raising In The Pipeline

The markdown by BlackRock comes at a crucial time for Byju's, as the company prepares for a substantial fundraising round of nearly USD 1 billion. This round, the startup's second flat funding round, is expected to involve investors from the Middle East and the United States. Byju's has already secured USD 250 million through structured instruments and is in the final stages of concluding another USD 700 million in equity funding.

If successfully raised, this funding will provide Byju's with some relief as it negotiates terms with its lenders. The company's lenders have demanded partial prepayment of the USD 1.2 billion Term Loan B that Byju's raised in November 2021, according to a media report.

Controversies At BYJU's: The Rough Weather For More Than 1 Year Now

Over the past 15 months, Byju's has faced numerous challenges. The company has been embroiled in controversies related to ED Raids, Valuation Markdowns, and extensive lay-offs.

Byju's has had to terminate over 3,500 employees in the last year. The combination of dwindling venture capital funding and a slowdown in demand for online learning services after reopening of educational institutes post pandemic has contributed to the company's difficulties.

USD 5 Billion in Funding Raised So Far

Founded nearly a decade ago by Byju Raveendran, a former teacher, and his wife Divya Gokulnath, Byju's has successfully raised over USD 5 billion in funding from equity and debt investors to date. In October of the previous year, the company secured a USD 250 million funding round, valuing it at a flat USD 22 billion.

As Byju's works towards its fundraising goals and addresses its operational challenges, the edtech industry will closely watch how the company navigates through these difficult times and whether it can regain investor confidence and maintain its position as a leading player in the education technology sector.