The Indian technology company Byju’s is the main reason why the British short Fraser Perring is targeting the investment company Sofina. What exactly is Byju?
“To understand the technology company Byju’s, you need to understand the Indian context,” said Jayant Nadiger, Flanders Investment and Trade (FIT) representative from Bangalore, India. Anyone wishing to become a doctor, engineer or bureaucrat in India must first pass competitive entrance exams. ‘Because general education is not enough to pass these tests, young people and their parents are seeking extra support in private and tutoring.’
Byju Raveendran, 41, has transformed his one-man business specializing in math education into the largest online training platform in India. Where other technology companies in India focus on schools to improve the quality of education, Raveendran focused on parents from the start. That way, he did not get stuck in the bureaucracies of Indian education.
In 2016, just years after its founding, Facebook founder Mark Zuckerberg and his wife Priscilla Chan donated millions to the company through their charity. Byju’s was immediately on the radar of virtually every major investment company on the planet. It raised billions of dollars from the world’s leading investment companies such as Sequoia, Naspers, Tiger Global and therefore Sofina.
Not insignificantly, when Sofina came on board in 2016, the company was valued at $ 600 million. In a few years, the company grew to a valuation of more than $ 20 billion. Even with more than $ 1 billion going up in smoke after Fraser Perring’s failure, Byju is still worth $ 8.64 billion. By 2021, Byju had revenue of $ 421 million with a profit of $ 6.6 million.
Investors’ motives are not far to seek. First, there is the market. In India alone, there are 300 million students who could use Byjus. In their own words, there are 7 million students who pay around 160 euros a year to access the online classes. More than 100 million students are registered on the platform. Due to the closure of schools during the corona pandemic, Byju experienced tremendous growth.
Second, there is the production cost of educational videos. It’s lower than entertainment productions that platforms like Disney + or Netflix are confronted with. In addition, the content should not be constantly updated. Or to put it this way with Anita Kishores, Chief Strategy Officer at Byju’s words: ‘Once you have found and worked out a format to explain Pythagoras’ theorem, do not change it quickly.’
The question then is what the British short Fraser Perring is referring to when he says the company is cheating. Negative rumors about the results of the education platform have been circulating for several years now. A BBC study last year spoke to parents who felt misled by sellers of Byju’s. They took out loans for tablets that they could not afford. In addition, the workload on the company would also be very high.
Byju also raised eyebrows as they reported annual results. These numbers were long overdue. For the figures for the year 2020, we had to wait until September 2021.
These results showed that Byju’s gets 70 percent of its revenue from sales of tablets. By offering Indian middle-class people an iPad they can’t afford, Byju’s would artificially inflate its subscriber base. Whether these claims are in fact true remains to be seen in the future. Sofina declined to answer questions Thursday.