BlackRock slashes Byju's valuation by 95% amidst financial crisis

In a significant blow to Byju's, global asset manager BlackRock has slashed the valuation of its holding in the startup by a staggering 95%, reducing it from $22 billion to a mere $1 billion. The valuation adjustment, disclosed by BlackRock, marks a drastic turn of events for Byju's, once hailed as India's most valuable startup with a peak valuation of $50 billion.

BlackRock, which owns less than 1% of Byju's, had earlier valued the company's shares at approximately $209.6 each in October of the previous year, down sharply from the peak of $4,660 in 2022. While the asset manager did not provide a detailed rationale for the valuation adjustment, it is notable as the most severe among several downgrades by investors. Prosus, owning about 9% of Byju's, had previously valued the startup at "sub $3 billion" late last year.

Byju's, known for its innovative educational approach using real-life objects to explain complex concepts, faced challenges as it expanded globally through acquisitions, spending over $2.5 billion in 2021 and 2022. The startup was gearing up for an IPO through a SPAC deal in early 2022, with a projected valuation of up to $40 billion. However, market conditions turned adverse due to geopolitical events, forcing Byju's to halt its IPO plans.

Currently, Byju's grapples with a series of setbacks, including difficulty in raising capital, meeting payroll obligations, and managing a billion-plus debt. The company missed its revenue target for the financial year ending in March 2022, according to a delayed account released last month. The departure of key executives, including CFO Ajay Goel, and public criticism from major investor Prosus further add to the challenges faced by the Bengaluru-based startup. Investors are closely watching how Byju's navigates these obstacles and whether it can regain its once-illustrious position in the edtech landscape.