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Byju's saga: Financial discipline biggest lesson for startups, says Simplilearn Co-founder

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Byju's saga: Financial discipline biggest lesson for startups, says Simplilearn Co-founder

New Delhi, March 3 (Ajit Weekly News) As embattled edtech firm Byju’s finds itself mired in several controversies, one learning that startups can take from this episode is to ensure “financial discipline”, Simplilearn Co-founder and COO Kashyap Dalal said on Sunday.

Facing an uphill battle with the investors, Byju’s is yet to process the salaries of its more than 20,000 employees for the month of February.

The amount raised through the rights issue is currently locked in a separate account “at the behest” of some key investors, its founder and CEO Byju Raveendran has told employees.

Dalal told Ajit Weekly News that the entire Byju’s story had gone wrong after multiple rounds of funding when they got into ‘financial engineering’.

“For example, Byju’s themselves were underwriting loans to parents who were buying their product and somewhere, that entire cycle just got completely out of hand, which has led to all kinds of financial issues,” Dalal noted.

“I think if there’s one learning for everybody, not just in edtech but outside of it, it’s basically “financial discipline”.

The edtech company once reached a peak valuation of $22 billion.

Today, it is fighting to stay afloat after suffering a 99 per cent valuation cut.

Dalal said while there are many problems and enough people have written about it, people forget the reason why Byju’s got so big.

“It was a good starting point. They had a good product and had a good model. At some point in time, they made wrong choices. Everyone should learn from it that you have to build a long-term business and not take some of the short-term calls,” he told Ajit Weekly News.

According to industry leaders, recent governance issues with well-funded and “poster boys” of startups have added to the ongoing bearish trend for the ecosystem amid the funding winter.

–Ajit Weekly News

shs/na/uk


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