"BYJU'S is one of the largest #Edtech #Startups in India and now it is in deep trouble!"
Let's see what all things have led to these problems in BYJU'S
Let's Begin....
Let's see what all things have led to these problems in BYJU'S
Let's Begin....
Out of the $4.7 billion pumped into edtech space in 2021, a massive $1.7 billion was raised by Byju's alone.
In 2021, Byju's made 10 strategic acquisitions worth $2.5 billion.
In 2021, Byju's made 10 strategic acquisitions worth $2.5 billion.
In Dec 2021, Byju's was valued at a whopping $22 billion making it the 13th most valuable startup in the world!
Well, we're done with 2021, which was a glorious year for India's edtech giant.
Well, we're done with 2021, which was a glorious year for India's edtech giant.
Come 2022, the tables have turned.
Apart from laying off 1000s of employees, and another 1000s resigning from their jobs, Byju is starring at a much more serious and threatening problem.
Apart from laying off 1000s of employees, and another 1000s resigning from their jobs, Byju is starring at a much more serious and threatening problem.
A four-letter acronym, FLGD i.e. First Loss Default Guarantee, is what threatens Byju's.
To understand FLDG, we must understand how Byju's and its edtech rivals achieved sky-high sales amid the pandemic, that too in a country with an average national income of ₹2,04,000?
To understand FLDG, we must understand how Byju's and its edtech rivals achieved sky-high sales amid the pandemic, that too in a country with an average national income of ₹2,04,000?
The answer to that is #LOANS.
A course worth ₹50,000 is sold to a customer, who barely can afford it, by partnering with a third-party lender who allows the parent to repay the loan in smaller EMIs of ₹2,000.
Now, quite a few parents will often be unable to repay their loans.
A course worth ₹50,000 is sold to a customer, who barely can afford it, by partnering with a third-party lender who allows the parent to repay the loan in smaller EMIs of ₹2,000.
Now, quite a few parents will often be unable to repay their loans.
What do the lenders do?
❌Tighten Loan Approval Criteria?
❌Raise Interest Rates?
All of these will affect edtech Byju's sales.
So, Byju's guarantees to repay the loan in case the customer defaults.
Now that, my friends, is called FLDG or First Loss Default Guarantee.
❌Tighten Loan Approval Criteria?
❌Raise Interest Rates?
All of these will affect edtech Byju's sales.
So, Byju's guarantees to repay the loan in case the customer defaults.
Now that, my friends, is called FLDG or First Loss Default Guarantee.
FLDGs have been encouraging lenders to take on more risk.
Banking regulators are unaware as these loans don't seem as riskier as they are if you look deeply into it.
But, this is just one part of the risk that Byju's is facing.
Banking regulators are unaware as these loans don't seem as riskier as they are if you look deeply into it.
But, this is just one part of the risk that Byju's is facing.
Where are FY 21 Financials?
#Deloitte, the longtime auditor of Byji's, has not yet signed off on its financials statements for the year ended March 2021.
That's right! It's been 15 months now. Investors and edtech peers are panicking.
#Deloitte, the longtime auditor of Byji's, has not yet signed off on its financials statements for the year ended March 2021.
That's right! It's been 15 months now. Investors and edtech peers are panicking.
But, why is Deloitte not okay with signing off Byju's statements?
Reports suggest that Deloitte's reason for not releasing the statements lies in the edtech's increasingly compled revenue recognition practices.
Reports suggest that Deloitte's reason for not releasing the statements lies in the edtech's increasingly compled revenue recognition practices.
For instance, that sale of the ₹50,000 course we spoke of earlier. How should it be recognized as revenue? Most of it upfront? Monthly or duration of its usage? A mix of both?
If Deloitte doesn't sign the financials, it can very well hamper Byju's dream of a US #IPO.
If Deloitte doesn't sign the financials, it can very well hamper Byju's dream of a US #IPO.
Pheww so many threats for Byju's before its #IPO.
Let's see how founder fix this problems.
That's the end of the Thread🧵
If you found it informative, then you can Like ❤️and Retweet🔄 the first tweet for wider reach.
Let's see how founder fix this problems.
That's the end of the Thread🧵
If you found it informative, then you can Like ❤️and Retweet🔄 the first tweet for wider reach.
https://twitter.com/YMehta_/status/1542148508329062400
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