By Hari Haran
Introduction
Byju’s, the India-based edtech company, is facing a critical deadline today as it is due to make a payment of $40 million and this indian startup byjus faces deadline.
This payment is a crucial milestone in the company’s ongoing efforts to raise funding and grow its business, and its successful completion is likely to have significant implications for the company’s future prospects. With the clock ticking down, investors and stakeholders are watching closely to see whether Byju’s can meet its obligations and continue on its upward trajectory.
The $40 Million Payment
Byju’s, the Indian edtech unicorn, owes $40 million in debt to a consortium of lenders led by InnoVen Capital. The company secured this debt financing in June 2018 to acquire Osmo, a US-based educational gaming startup. At the time, the acquisition was seen as a strategic move for Byju’s to expand its reach in the US market and bolster its product offerings.
However, the acquisition came at a hefty price tag of $120 million, with Byju’s using $40 million in debt financing to fund the purchase. Since then, the company has faced a number of financial challenges, including the impact of the COVID-19 pandemic on its revenue and profitability.
As a result, the company is now struggling to pay off its debt, with the $40 million payment deadline fast approaching.
Edtech Industry
The edtech industry has been one of the few sectors to benefit from the pandemic, as remote learning has become the norm. Despite this, Byju’s has seen its financial performance decline, with the company recently reporting a loss of $250 million for the fiscal year ended March 2021.
As the deadline for the $40 million payment looms, there is increasing pressure on Byju’s to find a way to pay off its debt and maintain its reputation as a leading edtech company in India and beyond.
The company has already explored a number of options to raise funds, including a recent round of fundraising that valued the company at $16.5 billion.
The next few weeks will be critical for Byju’s, as it tries to navigate its debt obligations while continuing to invest in its business and expand its reach in the global edtech market.
The company will need to demonstrate that it has a sustainable business model and can generate long-term profits if it hopes to secure the funding it needs to pay off its debt and thrive in the post-pandemic era.
What Happens if Byju’s Can’t Pay?
Byju’s is facing a deadline today to make a $40 million payment. If the company fails to make the payment on time, it could face serious consequences.
The payment in question is for the acquisition of TutorVista, which Byju’s completed in 2017. Byju’s agreed to pay $120 million for the online tutoring platform, with $80 million paid upfront and the remaining $40 million due in two installments of $20 million each. The first installment was paid last year, and the second one is due today.
If Byju’s can’t pay the $40 million on time, it could default on its debt and damage its credit rating. The company could also face legal action from TutorVista’s former owners.
Verdict
However, it’s unlikely that Byju’s will default on its debt. The company is backed by some of the world’s biggest investors, including Facebook co-founder Eduardo Saverin and Sequoia Capital. Byju’s is also in the process of raising another $1 billion in funding, which would give it a valuation of $15 billion.
In a statement,
“Remains committed to meeting its contractual obligations, The company also said it plans to use the $1 billion in funding to expand its offerings and reach more students around the world”.
Byjus’s Said