For years, India has marketed itself as the world’s next great innovation hub, the emerging Silicon Valley of the East. Politicians, business leaders and industry groups have celebrated the nation’s engineers as global talent, proudly pointing to every Indian-origin CEO leading a major American tech firm as proof of India’s global prominence. The narrative being pushed has been that India was no longer just the world’s back office – it was the future of technology.
Yet beneath the glossy slogans of “Digital India” and “Make in India,” reality dictates a very different story.
The promise of innovation has rarely matched the results. As noted in a report by The Wire, India’s allure for investors stems not from its depth of talent, but from the fact that its “labor is cheap and laws are lax.” Still, American venture capitalists, eager to stake a claim in the “next tech frontier,” have bought into the illusion. Capital flowed, partnerships multiplied and billion-dollar valuations were built, not on genuine technological breakthroughs, but on carefully crafted narratives that sold success.
Why India copies well but fails to lead in innovation
When “multinational educational technology company” BYJU’s emerged, it quickly became the perfect poster child for India’s startup dream. It was marketed as a unicorn – that is, a privately held startup company with a valuation of over $1 billion – proof that India could not only serve Silicon Valley, but become it. The company promised to transform how children learn and to usher in a new age of digital education. Yet, true to the national pattern, the promise unraveled quickly.
From unicorn to black sheep
Before its eventual financial and legal collapse, BYJU’s stood as one of India’s most celebrated startup success stories.
Founded in 2011 and officially being dubbed a unicorn by 2018, it grew from a small tutoring operation into India’s most valued startup by 2022, ultimately being valued at $22 billion.
Its learning app soon became a household name across India and founder Byju Raveendran earned a spot on the Forbes list of India’s richest people, celebrated as a self-made visionary transforming education. Former employees recalled his taste for five-star hotels and luxury cars, while his wife and co-founder, Divya Gokulnath, was seen networking in elite tech circles and Silicon Valley gatherings. Together, they emerged as global power players, symbols of a new generation of Indian entrepreneurs reshaping the country’s image on the world stage.
At its peak, BYJU’s went on a buying spree, acquiring 19 companies for more than $2.6 billion. The goal was to expand its main products and strengthen its presence in the United States. The company added new areas such as coding, job training and lifelong learning to its offerings and even pushed into the Middle East by becoming the official sponsor of the 2022 FIFA World Cup in Qatar.
BYJU’s also hinted at plans to go public within a year, through an initial public offering (IPO) either in India or the United States. Both options were said to be under review, with no immediate deadline. Industry reports also suggested a possible merger with a U.S. special purpose acquisition company (SPAC) that could have valued the business at around $40 billion, though co-founder Divya Gokulnath declined to comment.
Yet, beneath the optimism, warning signs were already visible. Despite being valued at $22 billion in September 2022, BYJU’s parent company, Think & Learn Pvt. Ltd., reported a staggering $554.77 million loss for fiscal 2021, largely attributed to soaring marketing and employee expenses, leading to layoffs and cost-saving measures to push towards achieving profitability. The company’s rapid rise had been built on hype and expansion, but the financial foundation was already starting to crack.
A fall from grace
In December 2022, when India’s child-rights commission called out BYJU’s over complaints of overly aggressive sales targeting families and first-generation learners. In the months that followed, scrutiny widened to its coding unit, WhiteHat Jr, amid allegations regarding advertising claims and hard-sell tactics. WhiteHat Jr filed defamation suits against critics, but then withdrew the cases after public backlash.
In April 2023, India’s Enforcement Directorate raided BYJU’s offices and later issued a $1.12 billion show-cause notice under the Foreign Exchange Management Act. The agency reported uncovering “incriminating” documents and digital evidence during the raid, citing serious financial violations, including missing regulatory filings, delayed export payments and unreported foreign direct investment transfers totaling about $3.37 billion between 2011 and 2023.
Investigators also found that the company had transferred about $1.18 billion to multiple foreign jurisdictions during the same period, allegedly under the guise of overseas direct investment. Despite being issued multiple summonses, founder Byju Raveendran repeatedly failed to appear before authorities, remaining evasive throughout the investigation.
The troubles didn’t stop there. The startup, backed by major investors including Prosus, Peak XV, Sofina, BlackRock, UBS and the Chan Zuckerberg Initiative, missed its revenue target for the financial year ending March 2023, according to financial statements released months behind schedule.
Soon after, the company’s chief financial officer, Ajay Goel, resigned to return to Vedanta, marking yet another senior exit following the abrupt departures of auditor Deloitte and three key board members in June. The turmoil deepened when Prosus, one of BYJU’s earliest and largest investors, holding over 9% of the company, publicly criticized the firm in July for failing to evolve and for repeatedly ignoring investor guidance.
These cascading resignations and public rebukes signaled that BYJU’s once-glowing image had fully unraveled and its troubles were only beginning.
BYJU’s has raised a total of $4.45 billion over 27 funding rounds: 2 Early-Stage, 22 Late-Stage and 3 Debt rounds. BYJU’s’ largest funding round so far was a conventional debt round for $1.2 billion in November 2021. BYJU’s had a total of 132 investors, 105 being institutional investors and 27 Angel investors.
From loan disputes to courtroom battles
Through 2023 and into early 2024, BYJU’s mounting troubles spilled into the courts as disputes over a $1.2 billion U.S. term loan escalated. Court filings and investigative reports revealed that about $533 million had been routed through BYJU’s U.S. subsidiary, Alpha, into accounts tied to Camshaft Capital Management, a fund linked to a 23-year-old portfolio manager whose Miami business address once corresponded to an International House of Pancakes. The findings painted a picture of questionable transfers and lax oversight surrounding the billion-dollar loan.
The financial strain only deepened. On July 16, 2024, the Board of Control for Cricket in India filed an insolvency case against BYJU’s over roughly $19 million in unpaid sponsorship dues. By the end of the year, both Deloitte and BDO had resigned as auditors, while major investors, including the Chan Zuckerberg Initiative, Prosus and Peak XV (Sequoia India) quit the board entirely.
India’s Byju’s can’t pay employees
At the same time, Qatar Holding petitioned the Karnataka High Court to enforce a $235 million arbitral award against Byju Raveendran and Byju’s Investments Pte Ltd tied to a 2022 $150 million loan for the Aakash acquisition, with interest sought at 4% per annum compounded daily from Feb. 28, 2024.
The legal blows culminated in February 2025, when a U.S. bankruptcy court issued a summary judgment finding actual fraudulent transfers and breach of fiduciary duty related to the movement of funds through BYJU’s Alpha, marking one of the most significant legal setbacks in the company’s dramatic downfall.
The myth of India’s innovation engine
Once hailed as the future of Indian innovation, BYJU’s now serves as its cautionary tale. What began as a symbol of national pride, the story of a small startup that conquered global markets, has become a lesson in how hype and ego can outpace substance.
In one of his last public interviews, founder Byju Raveendran dismissed the crisis, determined that he would see success again, saying,“Why I am confident of a comeback is that the most valuable thing I had is still with me,” referring to himself. It was a statement that perfectly captured the misplaced faith that defined BYJU’s rise, a belief not in innovation, governance or results, but in personality and perception.
For years, U.S. investors, from BlackRock and UBS to the Chan Zuckerberg Initiative, poured hundreds of millions of dollars into a single man and his myth, while American innovators back home struggled to break into markets dominated by foreign-backed giants. The question now is unavoidable: If so many investors were willing to stake billions on a person halfway around the world, why are they unwilling to back the homegrown entrepreneurs and talent right here in the United States, those who are locked out of markets increasingly monopolized by global capital and offshore influence?
BYJU’s collapse is more than the downfall of a company; it is a mirror held up to a global investment culture that prizes narrative over national interest and speculation over stewardship. It is a reminder that the same investors who helped inflate the illusion of India’s innovation miracle have ignored the innovators in their own backyard.
In the end, BYJU’s didn’t just fail as a business, it exposed the moral and economic blind spots of an era. The myth of India’s innovation engine has once again met the hard truth of execution and the cost was paid not only in rupees, but in large amounts of misplaced American capital.