Byju's valuation slashed by 44.6% to $11.7B by Baron Capital

Troubled edtech giant Byju's, once valued a nearly $22 billion, is now on the brink of losing its decacorn status as US-based Baron Capital has slashed its valuation by 44.6% to $11.7 billion as of June 30, 2023.

According to Baron Capital, the resignation of accounting giant Deloitte as an auditor and the departure of three board members are among the reasons for the valuation cut.

Why valuation cut?

In its June quarter report, Baron Capital mentioned that Think & Learn Private Limited, the parent entity of Byju's – Learning App, detracted during the quarter. The weak performance was driven by a marked slowdown in business momentum as Covid-related tailwinds that benefited online/digital education have begun to dissipate, Baron said. 

"In addition, Byju's announced that Deloitte had resigned as its auditor and will be replaced by BDO (another top five global audit firm). Three investor-appointed board directors also resigned during the quarter. These developments were deemed as material adverse events that required the fair market value of our holdings to be adjusted down accordingly," Baron added.

Despite reducing Byju's fair value, the asset management company said it believes in Byju's dominant position in the market and has a significant opportunity to benefit from structural growth in the growing Indian edtech sector.

The opportunity Byju's has

"As India's largest education technology player, the company is well positioned, in our view, to benefit from structural growth in online education services in the country," said the report. "While we are disappointed with recent developments, we continue to believe that Byju's remains a dominant franchise and can sustain low to mid-20s earnings growth in coming years."

Over the past few years, especially post-pandemic, The Indian edtech sector has been witnessing significant growth. According to data from Statista, in 2020, the entire EdTech market in India was valued at over $2.8 billion and is projected to reach over $10 billion by the year 2025.

The report further highlighted that the Indian K-12 segment is anticipated to remain the most valuable, followed by the test preparation and online certification market. 

This isn't the first time Byju's faced a valuation cut. Previously, US-based Blackrock slashed its valuation by 62% to around $8.4 billion (as of March 31, 2023), taking it out from the decacorn startup club.

Byju's isn't alone. Several elite startups like Swiggy, Pine Labs, and Ola also faced a major valuation cut by their investors.

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