Overexpansion and Strategic Missteps
Rapid Global Ambitions
Byju’s aggressive international expansion marked the beginning of its troubles. Between 2019 and 2021, the company expanded to 21 countries, driven by investor pressure to capitalize on the COVID-19-induced online learning boom.
Founder Byju Raveendran later admitted that this growth was “too soon, too fast,” straining the company’s operational and financial resources.
The decision to prioritize global dominance over sustainable scaling left Byju’s vulnerable to shifting market dynamics, particularly as pandemic restrictions eased and students returned to physical classrooms.
The $1.2 Billion Term Loan Blunder
A critical error was the 2021 decision to secure a $1.2 billion term loan instead of raising equity, despite having “enough equity options” from its 160 investors. This debt-heavy approach backfired when macroeconomic conditions deteriorated: the U.S.
Federal Reserve raised interest rates, and the Russia-Ukraine war disrupted global capital markets. Committed investments worth $700 million evaporated, leaving Byju’s unable to service its debt or fund acquisitions.
The loan later became a focal point of legal disputes, with U.S. lenders demanding full repayment of $1.36 billion (including interest).
Financial Mismanagement and Mounting Losses
Catastrophic FY22 Performance
Byju’s parent company, Think & Learn Pvt Ltd, reported a consolidated loss of ₹8,245 crore ($1.1 billion) in FY22, nearly triple its operating revenue of ₹5,014 crore. Staff expenses alone surged to ₹3,552 crore, reflecting unsustainable hiring practices.
Subsidiaries like WhiteHat Jr. exacerbated losses through high cash burn, forcing Byju’s to scale back operations and lay off 4,500 employees by September 2023. Despite cost-cutting measures, the company resorted to pledging founder assets to pay salaries, signaling deep liquidity crises.
Questionable Financial Practices
Allegations of fund diversion further eroded trust. A U.S. bankruptcy trustee accused Byju’s affiliates of siphoning $700,000 to Whitehat Education Technology, violating bankruptcy rules.
Lenders also alleged that $533 million was hidden from creditors, prompting insolvency proceedings in both India and the U.S. These actions underscored systemic governance failures and a lack of financial transparency.
Debt Crisis and Lender Disputes
Escalating Conflicts with Creditors
Byju’s debt woes intensified as lenders contested Raveendran’s claim that only ₹20 crore ($2.4 million) was owed to U.S. creditors. Glas Trust, representing term loan lenders, argued the edtech firm owed $1.36 billion and had defaulted for 17 consecutive months.
The dispute reached India’s Supreme Court after the National Company Law Appellate Tribunal (NCLAT) stayed bankruptcy proceedings, highlighting the complexity of cross-border insolvency.
Domestic Creditors Join the Fray
Aditya Birla Finance accused Byju’s of fraudulently classifying it as an “operational creditor” rather than a “financial creditor,” complicating repayment priorities.
Simultaneously, the Board of Control for Cricket in India (BCCI) sought ₹1.59 billion ($19 million) in unpaid sponsorship dues, leading the National Company Law Tribunal (NCLT) to appoint an interim resolution professional and suspend Byju’s board.
Legal Challenges and Insolvency Proceedings
Bankruptcy and Loss of Control
In July 2024, the NCLT’s decision to place Byju’s under a resolution professional marked a pivotal downfall. The tribunal cited defaults to the BCCI and other creditors, effectively stripping Raveendran of operational control.
U.S. subsidiaries faced Chapter 11 bankruptcy, with courts alleging violations of financial protocols. These parallel proceedings fragmented Byju’s global operations, complicating asset recovery for lenders.
Auditor Resignations and Reporting Delays
Byju’s delayed its FY22 financial disclosures by nearly a year, eroding investor confidence. Auditor resignations and executive departures compounded governance concerns, leaving stakeholders questioning the accuracy of reported figures. The lack of timely audits exacerbated suspicions of financial obfuscation.
Operational Failures and Market Contraction
Post-Pandemic Demand Collapse
The edtech sector’s post-COVID contraction hit Byju’s hardest. As students returned to classrooms, demand for online learning plummeted, exposing the company’s overreliance on pandemic-driven growth. Annual losses widened from ₹2,428 crore in FY21 to ₹5,592 crore in FY22, with core offerings like K-10 and test prep struggling to retain users.
Infrastructure Breakdowns
Recent non-payment to Amazon Web Services (AWS) led to the delisting of Byju’s Learning App from Google Play Store in May 2025, restricting access for Android users. While the app remained on Apple’s App Store, the incident highlighted worsening cash flow issues and vendor mistrust.
Corporate Governance and Leadership Accountability
Founder-Led Decision-Making
Raveendran’s centralized control drew criticism as strategic errors mounted. His insistence on retaining equity while taking high-risk debt reflected a misalignment with investor interests. The board’s inability to curb aggressive marketing spends—such as celebrity endorsements and cricket sponsorships—further depleted reserves.
Ethical and Regulatory Concerns
Byju’s faced allegations of exploiting parental anxiety through high-pressure sales tactics, though these claims were not fully substantiated in financial filings. More concretely, regulatory bodies scrutinized its accounting practices, particularly after the $533 million fund diversion came to light.
Conclusion: Lessons from the Downfall
Byju’s collapse serves as a cautionary tale for high-growth startups. Key takeaways include:
For the broader edtech sector, Byju’s implosion underscores the need for sustainable scaling, robust governance, and ethical customer engagement. As the company navigates insolvency, its legacy will likely inform regulatory reforms and investor caution in India’s startup ecosystem.
