BlackRock, one of the prominent investors in Byju’s, has drastically slashed the valuation of its stake in the Indian edtech giant from $22 billion to zero. This startling write-down, revealed in a recent SEC filing, marks one of the most dramatic declines for a startup in recent memory.

Byju’s, once celebrated as India’s most valuable startup, has experienced a turbulent year. The Bengaluru-based company struggled with its financial reporting, missing deadlines and falling short of its revenue projections by over 50%. These financial woes were exacerbated by significant governance issues, including the abrupt resignations of its auditor and several board members, which in turn disrupted a potential $1 billion fundraising effort.

Adding to Byju’s challenges, Prosus, one of its largest investors, publicly criticized the company, accusing it of consistently ignoring their advice. In a desperate attempt to secure funding, Byju’s managed to raise $200 million at a post-money valuation of approximately $250 million this year. However, this investment has since become the subject of legal disputes with some of its major investors.

Given these circumstances, BlackRock’s valuation adjustment, reducing its stake in Byju’s to zero, does not come as a surprise. This is not the first time BlackRock has marked down the value of Byju’s; last October, the asset manager had already cut its valuation of the company to around $1 billion.

Both BlackRock and Byju’s declined to comment on the recent valuation adjustment.

In a related development, HSBC also highlighted the severe devaluation of Prosus’ 10% stake in Byju’s. In a research note, HSBC indicated that the value of this stake had diminished to the point where analysts did not attribute any value to it, though they clarified this was not equivalent to assigning a value of zero. The note also applied significant discounts to the valuations of several other startups, including Meesho, Pharmeasy, ElasticRun, and Stack Overflow, reflecting the broader downturn in the edtech and SaaS sectors.

“We apply a 50% discount to the latest funding round/acquisition price for assets where the last round is older than six months to account for the recent correction in similar edtech/SaaS companies’ public sector multiples,” HSBC stated in the note accessed via S&P Global Intelligence.

This series of valuation cuts underscores the significant challenges facing Byju’s and similar startups in the current financial climate. The full impact of these adjustments remains to be seen as Byju’s navigates through this period of intense scrutiny and restructuring.

Source: Techcrunch