After Laying Off 2,500 Employees, BYJU’S Raises $250 Mn From Existing Investors

Days after announcing that it would be laying off 2,500 employees, edtech giant BYJU’S on Monday (October 17) said it has raised $250 Mn in a mix of equity and debt from its existing investors, including Qatar Investment Authority. 

However, the edtech startup didn’t disclose the names of other investors who participated in the round or the percentage mix of equity and debt in the round. 

The startup was last valued at $22 Bn and counts the likes of Sequoia, Prosus, Tiger Global, and ADIA among its investors. 

Last week, BYJU’S said it would be laying off 2,500 employees from product, content, media, and technology teams to become profitable by the end of the ongoing financial year 2022-23 (FY23).

In a statement, founder and CEO Byju Raveendran said that the company’s unit economics and the economies of scale are both favourable. 

BYJU’S said it is retargeting its marketing budget towards overseas markets. The startup claims to be following a three-pronged approach to attain profitability, wherein all K10 subsidiaries, including Toppr, Meritnation, TutorVista, HashLearn, and Scholar, will be consolidated into one business unit. 

Meanwhile, Aakash Education (physical test prep unit) and Great Learning (upskilling) will continue to operate as standalone independent units. It is also looking to increase its sales team.

Dark Clouds Over Edtech Sector

Last month, BYJU’S revealed its financial performance for FY21 after a long delay. The edtech platform’s loss jumped a whopping 20X to INR 4,588 Cr, while revenue from operations declined 3.3% to INR 2,428.3 Cr during the year. 

The company attributed the massive loss to high cash burn of WhiteHatJr.

The company attributed the massive loss to high cash burn of WhiteHat Jr.

Earlier this year, the startup laid off around 700 employees from WhiteHat Jr and Toppr, while another 800 WhiteHat Jr employees were forced to resign as the company asked them to work from office. 

The latest $250 Mn round is much smaller than the $500 Mn-$700 Mn that the startup was planning to raise, as per media reports.

A recent Morning Context report cited an executive from the company saying that the financial performance of BYJU’S in FY21 had spooked investors. 

Earlier, experts told Inc42 that BYJU’S valuation will be a cause of concern following its big loss during FY21. Analysts also said that the performance may result in a down round for the edtech startup. 

The latest development comes at a time when the edtech sector has been hit hardest by the ongoing funding winter. As per Inc42’s layoff tracker, edtech startups in the country have fired nearly 7K employees in 2022 so far, accounting for close to 45% of the 15,000+ layoffs that the Indian startup ecosystem has witnessed this year. 

Last week, Inc42 reported that celebrity-focused learning platform FrontRow laid off around 125-130 employees. Besides, the funding crunch has also led to as many as five edtech startups shutting operations – Lido, Crejo.Fun, Udaay, SuperLearn and Qin1.