This article is written by Nikunj Arora, pursuing a Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from LawSikho.

Introduction

The ed-tech unicorn Byju’s was valued at $11 billion in 2020 and $5.75 billion in 2019. While the whole world was going through the pandemic and facing serious consequences, the nationwide lockdown accelerated the growth of online learning startups including Byju’s, Unacademy, and Vedantu. Now, the ed-tech giant has surpassed Paytm and become one of the most valuable startups in India after raising approximately $340 million (Rs 2,500 crore) from various investors such as UBS Group, Eric S. Yuan (Zoom Founder), Blackstone, ADQ.

Post the funding from the above-mentioned investors, Byju’s valuation stood at $16.5 billion. In April 2021, Byju’s had raised more than $1 billion from the investors led by Baron Capital Group, Inc., Facebook co-founder Eduardo Saverin’s B Capital Group, and XN Exponent Holding. The ed-tech startup raised more than $2.3 billion in equity financing and the Company’s user base is over 80 million users, including 4.2 million annual paid subscribers. The current revenue rate of Byju’s is $800 million and they expect to reach a figure of $1 billion in the next 12-15 months. The ed-tech sector is growing rapidly and is attracting big money from investors as lakhs of students have moved towards online learning platforms. According to some experts, the implementation of the recently announced National Education Policy will fuel the growth of the education market in the country and there would be massive public spending. Byju’s is all set to go public before April 2023. This article discusses the story of Byju’s journey to becoming an ed-tech giant. 

About Byju’s

About the Company

• Byju’s is a Bangalore-based multinational technology company which was founded by ‘Byju Raveendran and Divya Gokulnath’ in 2011 and runs on a freemium model. It is India’s largest ed-tech company and is recognized as the creator of India’s most popular and appreciated school learning app.
• The ed-tech company was launched in 2015 after four (04) years of development and offers personalized and effective learning programs for classes 1-12 (K-12), and aspirants who prepare for competitive exams such as IIT-JEE, NEET, CAT, GRE, and GMAT. Byju’s app provides services and helps lakhs of students to learn in unique ways rather than relying on traditional learning methods.
• The app was developed by Think and Learn Private Limited, the parent company of Byju’s. By the end of 2018, the company had 15 million users, including 0.9 million paid subscribers. 

About Byju Raveendran

• ByjuRaveendran, the founder of the ed-tech giant, was born in 1981 in a village in Kerala. Byjus has a B.Tech (mechanical engineering) from a Government engineering college in Kerala and before starting Byju’s, he was working as a service engineer in a multinational shipping firm.
•  In 2003, during his vacations, Byju started helping his friends to prepare for the CAT exam. Along with preparing his friends for CAT entrance, he also gave the entrance exam and scored 100%. 
• He then started taking mathematical workshops for which he did not charge initially. 
• In 2009, he started to record his videos of the workshop he conducted.
• In 2011, along with his wife, Divya Gokulnath, he founded Byju’s.
• In 2021, he was awarded the ‘Forbes India Leadership Award (FILA) Entrepreneur for the Year’.

About Divya Gokulnath

• Divya Gokulnath, the Co-founder and Director of the ed-tech giant, was born in Bengaluru. She has a Bachelor of Technology in Biotechnology from RV College of Engineering in Bengaluru. 
• Byju encouraged her to become a teacher and her career started in 2008.
• In 2021, she was awarded ‘Entrepreneur of the Year’.
• At Byju’s, Divya manages content, user experience, and brand marketing.

 The journey

Year	Events
2003	During the two (02) months break from his job, Byju decided to help some of his friends who were appearing for CAT in Bangalore.  He also took the exam and scored 100%.
2005	Started teaching his friends who were appearing for CAT. Again took the exam and scored 100%. Appeared for IIM-A, B, C interviews and cleared all of them. Slowly, through word of mouth, he started teaching more students.
2008	Started offline CAT coaching classes.
2009	Started online classes for CAT. Used video format for CAT and similar entrance exams.
2011	Byju formed the company and registered it as Think & Learn Pvt. Ltd. Started creating core learning products which are now part of the app-based format.
2012	Entered both Deloitte Technology Fast50 India & Deloitte Technology Fast 500 Asia Pacific ratings. Raised $9 million from Aarin Capital in Series A round.
2013	Raised $9 million from Aarin Capital in Series A round.
2014	Launched tablet learning program for competitive exams and grades 8th-12th.
2015	Introducing Byju’s Learning App.  Within three (03) months of launch, Byju’s scaled to more than twenty (20) lakh students.
2016	Raised $75 million in Series C round led by Sequoia Capital and Sofina.  “Best Self Improvement” app award at Google Play India rating. Raised $50 million in Series D round from Chan Zuckerberg Initiative.
2017	Acquired Vidyartha, the learning guidance platform, and boosted its personalized learning products.  The Byju’s App became a business case study at Harvard Business School to illustrate how Byju’s technology has been impacting learning among students.  Reached valuation of $600 valuation with additional $30 million in Series F from Verlinvest (a family office based in Brussels). Acquired TutorVista and Edurite to accelerate its international expansion including the US. Launched Byju’s Math App for kids and Byju’s Parent Connect app to help parents track their child’s learning course. Bollywood actor Shah Rukh Khan became the brand ambassador.
2018	Scaled to more than 15 million users and 900,000 paid subscribers. Byju’s became a unicorn with a valuation of over $1 billion.
2019	The Board of Control for Cricket in India (BCCI) announced that Byju’s replaced Oppo Mobiles India Pvt. Ltd. as the official Team India sponsor.  Acquired a US-based Osmo (a maker of educational games for children aged 3–8 years) for $120 million.
2020	Raised from BOND Capital and regulatory filings revealed that BOND infused $23 million in Byju’s. Became the world’s most valued ed-tech startup with a valuation of $10.5 billion.  Acquired WhiteHatJr, an online coding school for young kids, for $300 million in an all-cash deal. Acquired LabInAppfor an undisclosed amount. Signed a deal to acquire Aakash Educational Services Ltd. for $1 billion
2021	Acquired Aakash Educational Services Ltd. for $940 million in a cash and stock deal. In talks to acquire Great Learning and Gradeup for $400 million. Acquired Scholar (Artificial Intelligence-based learning assistant for school students) for approximately Rs 15 crore.

Major acquisitions by Byju’s

Byju’s has made approximately eleven (11) acquisitions and the ed-tech giant has spent over $1.43 billion for the acquisitions. The following are the most popular acquisitions made by the ed-tech giant:

Acquisition of Osmo (2019)

On January 19, 2019, Byju’s acquired Osmo, a US-based maker of educational games, for $120 million. It was its first-ever purchase of a US Company. 

The following are the key highlights of the deal:

• Osmo was initially called ‘Tangible Play’.
• Osmo offers the benefit of both digital and offline learning using apps. Its base is designed for iPads or Amazon Kindle Fire Tablets.
• The acquisition of Osmo came weeks after Byju’s raised $540 million in a funding round from Naspers and Canada Pension Plan Investment Board (CPPIB).
• Byju’s offered Osmo a cash option, but Osmo elected for an all-stock payout.
• The acquisition helped to scale up Byju’s international plans to innovate, explore and set benchmarks for tech-enabled personalised learning solutions. 
• According to the reports, after the acquisition, Osmo continued to scale as a standalone brand.

Acquisition of Whitehat Jr (2020)

On August 6, 2020, Byju’s acquired WhiteHatJr for $300 million. WhiteHatJr, which was founded in 2018, is an Indian ed-tech startup that offers a live online 1:1 platform for coding and math. Initially, Karan Bajaj, the founder of the Company, raised $1.3 million from Nexus Venture Partners and Omidyar Network India.

The following are the key highlights of the deal:

• According to the reports, it was claimed that Byju’s would help WhiteHatJr by major investments and providing efficient teachers to meet the demand of new markets.
• WhitehatJr now operates separately by Karan Bajaj in India and the US.
• The investors of WhitehHatjr also received a multi-bagger exit.
• Byju’s became the leader in the world of coding.
• This was Byju’s fifth (5th) acquisition. 

Acquisition of Aakash Educational Services Limited (2021)

In January 2021, Byju’s acquired the Blackstone Group-backed Aakash Educational Services Ltd. (“AESL”) in a cash stock deal for nearly $1billion. AESL is a public unlisted company with 33+ years of experience, provides curriculum-based coaching for K-12 students and test preparatory services for several competitive exams.

The following are the key highlights of the deal:

• This is the largest acquisition made by Byju’s.
• This acquisition is also amongst the largest acquisitions by an Indian startup.
• This acquisition also amounted to be bigger than Snapdeal’s acquisition of Freecharge for $400 million and Flipkart’s acquisition of Myntra for $300 million in 2015 and 2014 respectively.
•  The founders of AESL and the Blackstone Group have minority stakes in Byju’s.
• Following the AESL buyout, Byju, his wife and his brother now own 26.09% of the ed-tech giant.
• On June 8, 2021, the Competition Commission of India (CCI) approved Byju’s acquisition of AESL and merger of Byju’s and AESL under Section 31(1) of the Competition Act, 2002. 
• Khaitan & Co. advised AESL and its founders on the sale of their shares to Byju’s.
• Shardul Amarchand Mangaldas advised Byju’s and Trilegal advised the Blackstone Group.

Legal challenges

Apart from several successful acquisitions, Byju’s also faced many legal challenges/issues.

Whitehat Jr’s defamation suit:

Byju’s acquired Whitehat Jr in August, 2020 and in November, 2020, Karan Bajaj, the founder of Whitehat Jr, filed a Rs. 20 crore defamation case against a software engineer in Delhi High Court.

The court ordered the engineer to remove specific URLs, his tweets commenting about the company’s teachers and their qualifications and restrained him from using his YouTube channel. On May 4, 2021, the company withdrew its defamation suit.

It was alleged in the suit that:

• The software engineer was defaming the company and spreading misinformation about the company. 
• The software engineer was infringing trademarks and copyright of properties owned by the Company using a YouTube handle.
• The engineer owned a YouTube handle “WhiteHatSr’ where he offered the same curriculum as the Company. 

Complaint against Byju’s

A Byju’s representative visited the house of a student, Mannasvi Jain, and told her and the parents that he could suggest her best field of education followed by an aptitude test. After conducting the test, suggested that the medical stream was best for the student.

The representative offered a discount on the Byju’s course of Rs 12,500 on the Rs 1 lakh package and assured them that they can claim a refund if they did not like the course. Therefore, after getting influenced by the words of representative and endorsement of Bollywood Actor Shah Rukh Khan, Manna Vi’s parents paid the amount. 

After a few days, Mannasvi felt she was not inclined towards the medical stream and demanded a refund of the same. But, the representative started to avoid them. Therefore, they filed a consumer complaint against Byju’s.

PankajChandgothia, counsel for the complainant, sent Byju’s notice to ask the company to refund Rs. 88,500 paid by the client. As Byju’s failed to pay the amount within the prescribed period, a notice was issued to the Company and Shah Rukh Khan.

On March 12, 2020, Byju’s refunded the amount and paid Rs 51,000 as compensation to Mannasvi Jain. The District Consumer Disputes Redressal Forum, Panchkula, then disposed of the consumer complaint against Byju’s.

Conclusion

“We’ve created students who are addicted to learning, and therein lies the secret to our success”

-Byju Raveendran

When the whole world was suffering from the ongoing pandemic situation and schools were shut down in different parts of India, Byju’s made the Byju’s app free for the students till April 2020. As a startup, the concept of Byju’s is quite innovative and has earned massive success in the industry. The Company along with its presence in the Indian market has captured and established its presence in the Middle East as well. The main objective of the ed-tech giant is to bridge the gap between the Indian education system and help students fall in love with what they learn. It is creating a place where students can take the initiative of learning themselves rather than being spoon-fed. As per Forbes list of India’s 100 Richest People (2020), Byju is India’s youngest billionaire with a net worth of $3.05 billion. On June 21, 2021, Byju’s raised another $50 million from India Finance Limited (IIFL) and Maitri Edtech. From being born in a village in Kerala, Byju has taken the company to great heights and now the ed-tech giant’s current valuation stands at $16.5 billion, making it one of the most valuable startups ever.

References

1. https://medium.com/@kapilkhanwani/case-study-byjus-business-model-c13f10692f2c
2. https://www.businesstoday.in/latest/corporate/story/whitehat-jr-drops-rs-20-cr-defamation-suit-against-critic-pradeep-poonia-294974-2021-05-04#:~:text=Byju’s%2 Downed%20WhiteHat%20Jr%20 had,misinformation%20about%20the%20start%2Dup&text=Edtech%20start%2Dup%20WhiteHat%20Jr,against%20its%20 critic%20Pradeep%20 Poonia.
3. https://www.newindianexpress.com/cities/chennai/2019/jul/13/byjus-told-to-pay-rs-52000-compensation-to-chennai-student–2003078.html
4. https://economictimes.indiatimes.com/wealth/earn/why-byju-raveendrans-firm-is-leading-in-the-educational-technology-space/articleshow/52700525.cms
5. https://www.business-standard.com/about/who-is-byju-raveendran
6. https://www.firstpost.com/tech/news-analysis/the-story-of-byjus-from-a-small-village-in-kerala-to-creating-a-global-edutech-startup-from-india-3688455.html
7. https://en.wikipedia.org/wiki/BYJU%27S
8. https://startuptalky.com/byjus-learning-app-success-story/#:~:text=While%20he%20was%20working%2C%20he,students%20for%20the%20 mathematics%20exams.

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