How Byju’s American Dream Ended in a Bankruptcy Fire Sale - Explained

What started as a game to scale Byju’s internationally, ended in an unexpected fire-sale that forced the crisis-hit edtech to retract its US ambitions. Two of its American assets, Epic and Tynker, have been sold for a much lesser amount than Byju’s paid for their acquisitions. A US bankruptcy court has greenlit the fire-sale of these two edtech platforms at steep discounts.

According to EdWeek Market Brief, CodeHS snapped up Tynker for just $2.2 million in cash, a huge fall from the $200 million cash-and-stock deal struck in 2021. Likewise, Epic has now been offloaded to China’s TAL Education Group for $95 million.

These fire sales were part of Byju' bankruptcy process in the US which involved an unpaid term loan of $1.2 billion. But what went wrong with Byju’s US playbook? It stemmed from a tangle of internal missteps, financial stress, and strategic overreach.

Cracks In Byju’s US Game

A group of lenders from the $1.2 billion loan consortium to Byju’s had earlier approached a US court seeking bankruptcy proceedings for three of the edtech firm’s American subsidiaries --- Epic, Tynker, and Osmo. These entities had served as guarantors for the term loan B, which Byju’s secured through it subsidiary, Byju’s Alpha, in 2021.

The lenders are pushing for a court-supervised restructuring under Chapter 11 of the US Bankruptcy Code, even as they remain locked in parallel litigation with Byju’s in US courts over issues surrounding the same loan.

Byju’s had acquired the three subsidiaries prior to taking on the debt and has since struggled to divest them — particularly Epic, which has been on the block for months. However, the long-going disputes with lenders and certain investors stalled potential deals, materialised now.

Prior to this, the lenders also filed a lawsuit in the US against Byju’s founder Byju Raveendran, his wife Divya Gokulnath, and former company executive Anita Kishore. The lawsuit alleged that the trio execute a scheme to hide $533 million in funds from the money they had lent to Byju’s Alpha.

A Delaware Bankruptcy also indicated that multiple fraudulent transfers had taken place at the edtech company. The court found that Raveendran had reportedly violated his fiduciary responsibilities as a director of the US entity, Alpha.

The legal case is part of a wider insolvency and financial debacle: Byju’s US arm filed for Chapter 11 in February 2024, auditors have resigned, the parent firm is under insolvency proceedings in India, with nearly every corner of its governance and expansion plans under scrutiny. The edtech company, which was once valued at $22 billion in March 2022, has fallen to nearly $1 billion valuation.

Byju’s Acquisiton Spree

Just like other new-age companies, Byju’s also went on an aggressive acquisition spree years ago. Between 2017 and 2021, it stitched together 17 companies with an average of locking more than three deals a year. At that time, the edtech giant was spending as big as $3 billion on acquiring other educational platforms. Of this amount, it spent approximately $820 million only on US-based edtech companies.

The most expensive bet was Aakash Educational Services, a heavyweight in India’s education sector for medical and engineering entrance exams preparation. Despite being sold to Byju’s for $950 million, Aakash retained its independent identity, in which Manipal Group’s Ranjan Pai became largest shareholder in the past few years.

In the US, Byju’s acquired Epic for $500 million in 2021. Epic is one the leading digital reading platforms for kids 12 and under, with a collection of over 40,000 popular, high-quality books, audiobooks and videos from more than 250 of the world’s top publishers. In the same year, it also acquired US-based coding platform Tynker for approximately $200 million.

Next in line was The Great Learning app, scooped up for $600 million to mark Byju’s entry into higher education and upskilling space. While this platform also continues to function autonomously, there have been ongoing conversations among lenders about a potential sale. In addition, it also bought WhiteHat Jr for $300 million. However, it faced internal restructuring and valuation write-offs amid a significant fall in revenue.

Other acquisitions included Toopr and GeoGebra for $150 million, Osmo for $120 million in 2019, Scholr, HashLearn, Vidyartha, LablnApp, Gradeup, TutorVista, Edurite, and Math Adventures. Gradeup was even rebranded as Byju’s Exam Prep.

Byju's 3.0 In Process

Yet amid the chaos, founder Byju Raveendran indicated that the edtech giant will rewrite its original narrative. “We don’t belong in courtrooms. We belong in classrooms. That’s where we started, and that’s where we’re going back,” he had earlier told ANI in an interview.

To be more precise, Raveendran revealed the company’s next move ---- Byju’s 3.0 ---- with a message rooted in purpose over profit. The founder stated that his focus only remains 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.

Despite setbacks, Raveendran believes that the responsibility of rebuilding the edtech start-up lies with him because the founders owe it to students, teachers, and employees who trusted them. “Byju’s 3.0 will stay true to our original mission,” he said, while remaining close-mouthed about the exact form of Byju’s 3.0.

However, he clarified his principles which remain focused on teachers and students. “We will leverage AI to enhance teachers, not replace them. We will be focused on uplifting underperforming students.....everything we’ll do will create an impact at a scale which we’ve not been to do before,” Raveendran added.