Byju’s downfall: From being startup star to filing insolvency

BENGALURU/MUMBAI (Reuters) -Indian edtech company Byju's was staring at insolvency proceedings on Tuesday following a tribunal order, deepening a crisis that has seen the one-time market darling's valuation plunge from about $22 billion to less than $2 billion.

Here is an overview of Byju's and its troubles:

WHAT TRIGGERED THE INSOLVENCY?

The Indian cricket board last year asked a tribunal to initiate insolvency proceedings against Byju's for defaulting on $19 million of dues. The dispute is over payments related to sponsorship rights for the Indian cricket team's jerseys.

Byju's has said it wants to settle the matter, but a tribunal on Tuesday ruled in favour of the cricket board and appointed a resolution professional to oversee the company, suspending its board of directors.

WHAT'S THE TUSSLE WITH INVESTORS?

In February, a group of shareholders, including tech investor Prosus, alleged "financial mismanagement and compliance issues" at Byju's and called for the removal of founder and CEO Byju Raveendran, and a reconstitution of the board.

"We are deeply concerned about the future stability of the company under its current leadership and with the current constitution of the Board," the shareholders said.

Byju's, which has denied mismanagement, says the investors don't have the power to vote out its CEO.

In June, Prosus wrote off the value of its 9.6% stake in Byju's, making the Dutch firm the first to fully write-off its investment in the troubled startup.

WHY DID DELOITTE, BOARD MEMBERS RESIGN?

Last year, Deloitte said it was resigning as auditor because Byju's had delayed financial statements for the year ending March 31, 2022. Deloitte said it did not receive necessary documents even after writing several letters to the board.

Three board members of Byju's - representing investors Peak XV Partners (previously Sequoia Capital India), Prosus and Chan Zuckerberg Initiative - also stepped down.

WHAT DOES BYJU'S DO?

Byju's says it is the "world's largest education technology company". It offers online tutorials on subjects such as math, physics and chemistry for school students.

The online business boomed during the COVID-19 pandemic. Byju's valuation shot up from $5 billion before the pandemic to $22 billion in 2022, and it acquired several companies on the way.

WHO ARE BYJU'S FOUNDERS?

Byju's is run by its founder, Byju Raveendran, and his wife, Divya Gokulnath. Raveendran, an engineer by training whose parents were teachers, started teaching mathematics to friends, and built the business as its popularity grew.

He launched Byju's in 2011 and its app in 2015.