BlackRock, the US-based asset manager, has reduced the valuation of Indian edtech unicorn BYJU’s by nearly 50% to $11.5 billion. This is a steep markdown from the company’s last valuation of $22 billion in 2022. The assessment by BlackRock, which owns less than 1% stake in BYJU’s, values the company’s shares at $2,855 per unit, down from $4,660 in April 2022. This news comes amid reports that BYJU’s is seeking to raise $500 million from multiple investors, including TPG. BYJU’s has been struggling with potential debt issues, firing thousands of employees, and rising losses, which increased nearly 20 times year-on-year to INR 4,588 crore in the financial year 2020-21. Along with a sharp markdown in its valuation by BlackRock, the edtech giant is facing multiple challenges such as debt issues, competition from peers in the offline space, mounting losses, and delayed financials. The startup fired 4,000 employees last year, and its break-neck growth of 2021 seems to have come to a halt. The biggest issue seems to be the 20X YoY increase in losses to INR 4,588 Cr in FY21 compared to INR 231.69 Cr in FY20. Additionally, BYJU’S has been criticized for questionable accounting practices and a lack of clarity on its path to profitability.
BYJU’s valuation by nearly 50% could add to the problems faced by the Indian startup ecosystem. The ecosystem has been under scrutiny for high valuations and compliance issues over the past year, and such markdowns could further dent investor confidence. Additionally, it could also impact the ability of Indian startups to raise funds and grow in the future. However, it’s worth noting that the Indian startup ecosystem has shown resilience in the face of challenges and has continued to attract significant investments.