Raveendran is not a criminal, his business strategy is flawed: Suhel Seth

ED Summons: BYJU’s founder Byju Raveendran is not a criminal, but his business strategy was flawed, according to brand guru and founder of Couselage India Suhel Seth. 

Speaking to Republic Business’ Editor-in-Chief Arnab Goswami on the Debate, Seth said the day is not just a bad one for BYJU’S but also serves as a wake-up call for all startups.

The Enforcement Directorate on February 22 issued a lookout notice against the embattled edtech’s founder, amid speculations that Raveendran has moved base to Dubai.

The company has stated there will be no representative from their board in the Extraordinary General Meeting (EGM) called by BYJU’S investors on February 23, which include PeakXV Partners and the Chan Zuckerberg initiative.

Accusing the investors of creating pressure on startups to return investor money, Seth said, “It is a vicious circle. The persons who are funding these organisations are the first ones to exit.”

He blamed the 'valuation game' in the startup world as reasons for the debacle, adding that it was not just a bad day for BYJU'S but also a wake-up call for startups.

BYJU’S, which was valued at $22 billion in 2022, took an almost 99 per cent valuation cut for raising a $200 million rights issue, which Raveendran said was “fully subscribed.”

“The problem with BYJU'S was that it wanted to get too big in too little time, (which is a) classic case of greed overshadowing wise, economic prudence,” financial expert Kishore Surbamanian said during the Republic debate.

BYJU’S is in trouble for its extravagant marketing, with the BCCI dragging them to NCLT last year for non-payment of dues. Amid failing work conditions and defaulting employee salaries, the edtech was in flak for partnering with football legend Lionel Messi.

They later termed the partnership as a “sustainability initiative.”

The Term Loan B of 2022 also created troubles from lenders, who filed cases in US’ Delaware and in Indian courts as well.

“Non disclosure, FEMA violations, not paid EPFO, greed gaining over sensible economics have shown the great model for edtech has no rationale for fiscal prudence,” Subramanian said.

Shrinidhi Ravishankar, Co-Founder and CEO of Cherri Learn said BYJU’s brought around the edtech revolution since 2011, with over 30,000 startups having cropped up over a decade later. But loans to subscribe to edtech products was problematic.

“The next phase for the edtech space is into impact education,” he said.

There were reports of disgruntled parents taking a TV home from a BYJU’s facility over non-refund of their tablet offering.

BYJU’S has made several acquisitions, include WhiteHat Jr. and the coveted Aakash Institute.