Byju’s, once valued at $22 billion, is now reportedly worth nothing according to a research note by HSBC. This drastic write-down marks one of the most remarkable startup declines in recent history. The Bengaluru-based edtech giant had a challenging year, struggling to meet financial reporting deadlines and facing governance issues that led to the resignation of its auditor and board members.
The troubles continued as Byju’s faced difficulties in raising funds, with a $1 billion fundraise being derailed due to the aforementioned issues. Prosus, one of Byju’s largest investors, publicly criticized the startup for not heeding its advice. Moreover, Byju’s managed to secure $200 million at a post-money valuation of around $250 million this year, but the funding is now being legally disputed by major investors, including Prosus.
Considering these circumstances, HSBC also estimated that Prosus’ 10% stake in Byju’s is now worth zero due to the ongoing legal battles and funding challenges. Prosus has invested more than $500 million in Byju’s and has not sold any shares thus far.
HSBC’s research note also sheds light on the declining valuations of other startups. Pharmeasy, an online pharmacy, is estimated to be valued at $2.8 billion (down from its peak of $5.6 billion in 2021). Social commerce platform Meesho is now valued at $2.5 billion (down from $4.9 billion), agritech startup DeHaat at $400 million (down from $800 million), and logistics startup ElasticRun at $800 million.
Furthermore, HSBC estimates that Stack Overflow, which Prosus acquired for $1.8 billion last year, should now be valued at $900 million, while GoodHabitz’s value has dropped to $100 million from $200 million.
To account for the correction in similar edtech and SaaS companies’ public sector multiples, HSBC applies a 50% discount to the latest funding round or acquisition price for these assets, particularly those with a last round older than six months.
As of now, Byju’s has not responded to requests for comment outside of business hours. The challenges faced by Byju’s and the declining valuations of other startups highlight the volatile nature of the startup ecosystem and the risks associated with rapid expansion and governance issues. Investors and stakeholders must carefully consider the financial health and governance practices of startups when evaluating their potential investments.