"Unmasking India's Unicorn Startups"
Tags: startup, indianstartup, byjus, webdev
Published: 2023-08-24 14:24:34

Have you heard of the word UNICORN?

No, I am not talking about the mythical one-horned animal (🦄). I am talking about Byjus,Nyka, etc.

In business terms, a unicorn is a privately held startup company valued over $1 billion Dollar.

India has 108 unicorns and it’s a good number for a growing economy like ours. but most of these companies are not profitable. For example, take buyjus, at one point it was one of India’s most valued startups, The GOLDENEYE Boy of the unicorn club. but in this last year, it has seen a dramatic downturn, investors no longer believe in its potential, employees are being laid off and its owner Bayju Ravindran is no longer a billionaire.

So, What exactly went wrong? Our Indian Startups are highly overvalued and Is this summer turning into a funding winter? more importantly, why should you care?


![Image description](https://cdn.hashnode.com/res/hashnode/image/upload/v1692814997020/4b55745c-3b98-4954-ad4e-14f1c86740ac.webp?auto=compress,format&format=webp)

Byjus was founded in the year 2011, the founders were Bayju Ravindran and Divya Gokulnath .So that’s where the name byjus comes from. So the company started with online videos. learning programs and preparations for competitive exams. But things took a turn in 2015, and that’s when Bayjus launched its learning app by the end of 2018 the app had more than 15 million subscribers and Byjus became a UNICORN. But the boom really happened during the pandemic. Everyone was at home, they were learning on their devices so Buyjus saw a meteoric rise there was exponential growth, and it became the growing star of the edtech market what did the company do next?


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/5xlyuoqgpe4kujuv90th.png)

They decided to expand. They went on an acquisition spree. They acquired the company called WHITEHAT JR, another startup in the edtech and this acquisition was for 300 million dollars. Then they bought a tutorial chain called AAKASH and this was for 950 million dollars and it did not end here. Byjus kept adding more companies to the shopping cart like the topper, epic, Great Learning etc. they came at a hefty price. we’re talking about more than 2 billion dollars. but expansion was not the only thing on their mind the company scaled up it’s marketing too. It poured millions into promotions. Byjus became the main sponsor of the Indian cricket team, it was the official sponsor of the FIFA world cup,it robbed the Bollywood star Sharukhan and football legend “Lionel Messi “ all to promote the brand .

This was the dream run for Byjus but like most good things these too came to an end. you see Byjus was depending on students to learn online. They were expecting them to stay at home. but soon the world opened up, students returned to schools. but byjus kept spending, it kept growing, investors kept pouring in money and they did not expect or predict a downturn which brings us to 2021. that’s when the first signs of trouble emerged. Byjus posted a loss of 327n million dollars this was 17 times more than 2020 ( based on this article on BBC ) and this was just the beginning. Since then bayjus has only gone from one scandal to another. First, there were complaints by parents. They said Bayjus sales executives were forcing them to buy courses. Some of these parents could not even afford them, but the byjus executive did not care about that. they only care about hitting their sales targets ( an article was published on The Economic Times based on the similar issues) . Then came the financial troubles, the company tried to cost cutting, not by reducing expenditure but by firing hundreds of employees ( Economic Times). The troubles continued though!

So You get the drift, The one celebrated company is now mired in debts and Scandals. In 2022, its valuation was worth 22 billion dollars, this year it has been slashed to 5.1billion dollars

It’s an extraordinary unravelling and also a cautionary tale because this is not the story of just one company, this is the story of most of India’s Unicorns like Swiggy, Zomato, Paytm, Bharatpe . I am sure you’ve heard of these names, perhaps even used most of them. These are all highly valued companies but they all are burning money. You see Valuations no longer have any relation to success and profits. It’s actually a huge problem in the Indian startup ecosystem. One report says most early startups in India are overvalued and this hyper valuation is now coming back to bite them (read the report here ). I have some numbers 55 of India’s most valued startups remain in a loss. So here is the full picture, Indian startups are burning money they no longer have unlimited access to unlimited money. It may look like a downturn to but basically, this is a reset. These companies grew unprecedentedly until 2021, they were valued at sky-high levels and now they’re finally being valued at a more realistic level. Does that mean that the Indian startup economy is failing? Well No! It’s just the bubble is bursting like I said this is the reset, Indian Startups have immense potential but valuations need to be based on reality not illusions. you can say that Indian startups are at a crossroads, they need some course corrections and growth will follow