SAVING BYJU'S: INSIDE THE GREAT RESCUE ACT

As the edtech company navigates its year from hell, three men are putting the guard rails around it

- Ranjani Raghavan

In late September, Ajay Goel told Byju’s, India’s best known edtech startup, that he was resigning as the chief financial officer (CFO). A calm, introverted executive, Goel had been hired only a few months earlier—in April—after an 18-month search for a CFO. The resignation, therefore, came as an unexpected setback and added to the long list of woes that has sunk the company into a quagmire of distress over the last one year.

Byju’s has struggled to file its audited financial statements on time. In June, Deloitte Haskins & Sells resigned as its auditor, noting that the founders had not responded to several emails on the 2021-22 financial statements. Then, three investor-external board members—from Peak XV Partners, Prosus Ventures and Chan Zuckerberg Initiative—also resigned within weeks of each other. Prosus and Peak XV cited corporate governance lapses as their reasons for stepping down. Byju’s, meanwhile, was facing litigation from lenders while also struggling to raise equity capital.

The edtech company, perhaps, did not have proper internal controls. This week, the directorate of enforcement, India’s economic intelligence agency, said it is investigating the company because it failed to properly document transactions involving foreign capital. This includes investments received as foreign direct investment.

A darling of the investors once upon a time, the company is now worth less than 10% of the $22 billion it commanded in March 2022, CB Insights, a market intelligence firm, stated this month.

Goel’s departure—he left to join mining giant Vedanta Ltd—was a shocker in this context. The exit triggered anxieties within the company’s investor ecosystem and raised eyebrows in the broader startup world. What did he see that the outside world did not? He simply received an offer from Vedanta which was too good to refuse, some believe.