PTC Web Desk: In a recent development, the Enforcement Directorate (ED) has barred Byju Raveendran, the 43-year-old entrepreneur and founder of Byju’s, from travelling outside the country. Initially, a lookout circular ‘on intimation’ was issued, notifying the authorities about foreign trips by Raveendran. However, the ED has escalated the restrictions by issuing a lookout circular that empowers the authorities to prevent him from leaving the country.
Financial Struggles and Legal Battles
Once hailed as the poster child of India’s startup ecosystem, Byju’s has faced substantial setbacks, including massive losses and a staggering 90% dip in valuation. The company witnessed the departure of key investors and the resignation of its auditor Deloitte. Furthermore, Byju’s is entangled in a legal dispute with lenders in the United States over a $1.2 billion loan.
Legal Challenges and Shareholder Discontent
Byju’s troubles extend beyond financial woes. A group of shareholders has called for an extraordinary general meeting to replace Raveendran and appoint a new board. The Karnataka High Court, however, has granted temporary relief to Raveendran by stating that decisions taken at the meeting would be deemed invalid until the next hearing. Byju’s claims the meeting is an attempt to disrupt the company’s management and functioning.
Investor Landscape and Board Changes
Key investors in Byju’s include tech investor giant Prosus, US growth equity firm General Atlantic, and the Chan Zuckerberg Initiative, founded by Facebook’s Mark Zuckerberg and Priscilla Chan. Representatives from Prosus and the Chan Zuckerberg Initiative stepped down from Byju’s board in the previous year.
Rapid Rise and Subsequent Challenges
Byju Raveendran’s journey has been characterised by a meteoric rise in the edtech industry. From initiating classes for MBA aspirants in 2006 to launching the Byju’s learning app in 2015, the company quickly became India’s first edtech unicorn. The surge in demand during the Covid-19 pandemic led to rapid expansion. However, challenges emerged, including allegations of a toxic work atmosphere and aggressive marketing practices.
Financial Turmoil and Sponsorship Cutbacks
Prosus significantly cut Byju’s valuation by 75%, resulting in layoffs and allegations of financial mismanagement. The edtech firm, at its zenith, heavily invested in sponsorships, including endorsements with the Indian cricket team, the Football World Cup, and signing football legend Lionel Messi as a global ambassador. Growth slowed as schools reopened, and Byju’s faced substantial financial losses.
Enforcement Directorate Scrutiny
Adding to the woes, Byju’s foreign investments are now under the ED’s scanner. Prior to the travel restrictions on its founder, the ED issued showcause notices to Byju’s parent firm, Think & Learn, over alleged violations exceeding Rs 9,362 crore under the Foreign Exchange Management Act.
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