Byju’s 1.0, 2.0, 3.0: Why New Versions Won’t Fix the Real Issue

Edtech major Byju’s has gone through a wild ride, rewriting its playbook again and again. Version 1.0, 2.0 and now 3.0—each time, the company has tried to make a comeback with new business strategies. But despite repeated efforts to save the sinking ship, the once-mighty edtech crown jewel with a $22bn valuation has landed in insolvency proceedings.

Yet founder and chief executive Byju Raveendran still has faith in his edtech dream. His aim to help children become confident self-learners has driven him to try again, this time with ‘Byju’s 3.0’. The latest version will focus on AI-driven personalised learning.

“Byju’s 1.0 was offline, while 2.0 was about tech-delivered context. Byju’s 3.0 will be about deep tech-driven personalisations with the right approach,” Raveendran had earlier said.

However, amid these business model experiments, the core issues—lack of financial transparency and governance lapses—remain unresolved.

 “How can he talk about improvement when he hasn’t cleared old dues? He wants people to move on, but the core problem is financial accountability, not just the business model. The original model may have been promising, that’s why people trusted Byju’s. But now, all focus is only on restructuring, not repairing the finances,” says Aniruddha Malpani, founder of ApniPathshala, a non-profit national network of community-based digital learning centres.

This raises a bigger concern: Is Raveendran truly learning from past mistakes or simply repackaging them?

Byju’s 1.0: Tutor-Turned-Entrepreneur

Before becoming India’s most-talked about edtech cautionary tale, Byju’s was a success story. Founded in 2011 by Byju Raveendran and Divya Gokulnath, the platform initially focused on in-person coaching for competitive exams.

Raveendran’s engaging maths lessons in packed auditoriums gained a cult following, leading the duo to shift online in 2015 with the launch of ‘The Learning App’. It offered pre-recorded video lessons, quizzes and adaptive learning paths for K–12 students and test preparation aspirants.

Within the first year, the app had surpassed 2 million downloads. The company adopted a ‘freemium’ model, offering trial content for free while upselling annual subscriptions priced between ₹20,000 and ₹50,000. By financial year 2018, revenue had grown to ₹490 crore, with over 9,00,000 paid users and 15mn registered users overall. The brand tapped into star power—Shah Rukh Khan was roped in as brand ambassador—and advertising budgets soared.

Backed by high-profile investors like Sequoia, Tencent, and the Chan-Zuckerberg Initiative, Byju’s became India’s first edtech unicorn in 2018. It then went on an acquisition spree to expand globally. Between 2019 and 2021, the company acquired at least 17 start-ups, including WhiteHat Jr, Aakash, Great Learning and Tynker, though several were sold in a fire sale by 2025.

Riding on the pandemic-fuelled boom in online learning, Byju’s reached a peak valuation of $22 billion in 2022, becoming the world’s most valuable edtech start-up. To finance its growth and acquisitions, it raised a $1.2 billion Term Loan B from US lenders.

This strategy worked during Covid, when online education surged. But once schools reopened, demand waned. Byju’s, having spent aggressively, suddenly found itself strapped for cash.

Byju’s 2.0: Reshuffle to Ruin

“We have revamped our strategies. You will see that in Byju’s 2.0, the worst is over for us,” Raveendran had said.

In its second avatar, Byju’s brought in fresh leadership and reshuffled the organisation to curb operational chaos. It introduced a four-tier, tech-driven internal sales process to replace its direct sales model and slashed annual subscription fees by nearly 40% to ₹12,000. The business was reorganised into three verticals: the learning app, online/offline classes and test preparation. To cut costs, the company laid off about 2,500 employees in 2023.

Raveendran also promised “profitability” at the company level in financial year 2024. “The company will surprise everyone with its numbers,” said Raveendran, exuding confidence.

The subsidiary ‘Great Learning’ showed improved margins and revenue exceeding $100 million in financial year 2024, giving some hope. But consolidated financials were not released, raising further doubts. By early 2024, the company’s valuation had fallen to $1 billion, with some investors pegging it even lower. Raveendran’s personal net worth dropped from $2.1 billion to zero the same year.

Its troubles deepened after Deloitte resigned as auditor, citing long delays in submitting financial year 2022 statements. Three key investor board members from Prosus, Chan-Zuckerberg Initiative and Peak XV also stepped down over governance concerns.

Meanwhile, US bondholders pushed Byju’s Alpha (its US entity) into Chapter 11 bankruptcy after it defaulted on the $1.2 billion Term Loan B. Byju’s Alpha also sued Raveendran, cofounders, and executives in Delaware, accusing them of orchestrating the concealment of the same $533 million.

And that's just one chapter in an expanding legal saga, there were multiple governance lapses and financial fraud allegations. Version 2.0 revealed just how fragile the foundation really was. Instead of course correction, it marked the beginning of a deeper unraveling.

Byju’s 3.0: Betting on AI for a Comeback

Today, Byju’s is facing legal disputed over $1 billion in unpaid debts, both in the US and India. It is undergoing insolvency proceedings in India under the Insolvency and Bankruptcy Code (IBC) after defaulting on a ₹158 crore payment to the Board of Control for Cricket in India (BCCI).

Yet Raveendran has announced plans to revive the company with Byju’s 3.0. “We don’t belong in courtrooms. We belong in classrooms,” he told news agency ANI in an interview.

The founder revealed that the company’s next avatar would be rooted in purpose over profit. He stated that his focus remains solely on students, teachers and the transformative power of learning. “I am so excited to talk to you about Byju’s 3.0... there is so much respect for teachers and learning,” he said.

Adding that the responsibility of rebuilding the start-up lay with him as students, teachers and employees had placed their trust in the company, Raveendran said, “Byju’s 3.0 will stay true to our original mission,” while remaining tight-lipped about the form it would take.

“We will leverage AI to enhance teachers, not replace them. We will be focused on uplifting underperforming students…everything we’ll create [will have] an impact at a scale we’ve not been [able] to do before,” he revealed.

"I'm stubborn when it comes to the mission. It's going to be the same. How do we make it easy and interesting for students? How can we use AI not to replace teachers but to enable teachers to become better teachers? How can we move the bottom quartile of students to the next one or the next one?" he added.

Despite the bold pitch, industry observers remain unconvinced. The company’s crisis, they say, is rooted in governance and transparency than in the edtech’s model.

Tanya Prasad, chief investment officer, LegalPay, a fintech company that focuses on litigation financing, says the online learning space still holds strong demand in the wake of the pandemic, an indication that the company’s concept is sound. Byju’s trouble, instead arose from internal failings—opaque finances, delayed audits and aggressive accounting.

“The crisis came from mismanagement and lapses in accountability rather than a flawed business model,” she said, while calling version 3.0 “premature” and “misleading” on account of unsettled debts.

The Real Fix: Not Pivots, But a Clean-Up

Even as Raveendran pitches a bold AI-led revival, legal experts point out that his hands are tied; every new move requires creditor consent and regulatory oversight under insolvency proceedings.

Saumya Brajmohan, partner at law firm Solomon & Co, says it would be difficult for a company mired in problems to re-enter the market without consequences. Byju’s is also likely to take a reputational hit, and its past business or corporate governance records could make it hard to regain the trust of investors, she says.

She adds that the company must first address its issues through a formal clean-up, including bringing all statutory and regulatory compliances in line under the insolvency process.

“In any event, an investor, potential buyer or stakeholder will conduct a complete due diligence of the company and is likely to come across the impending issues, which may hamper any further investment in the company due to involvement of higher degree of risk,” she explains.

On the legal front, business decisions including new product launches must now be approved by the Resolution Professional (RP) and the Committee of Creditors (CoC) because the Corporate Insolvency Resolution Process (CIRP) initiated in July 2024 is still in place, said Sumant Nayak, Senior Partner at Desai & Diwanji.

He further describes that under the IBC Code, once moratorium is triggered, the powers of the Board of Directors shall stand suspended and the same shall be exercised by the RP.

"If and when Byju’s is out of insolvency proceedings, it’s back to the normal channel and thus is theoretically free to explore any avenue subject to its financial strength and credibility," he says.

Hence, the verdict is clear. The company must undergo a transparent clean-up of its financial and governance lapses before it can begin to rebuild public trust and investor confidence.