Simplilearn Co-founder says Financial discipline is the biggest lesson for startups, according to Byju’s saga

New Delhi, March 3 (IANS) – Facing financial turmoil, edtech giant Byju’s has failed to pay its more than 20,000 employees for the month of February. The company, once valued at $22 billion, is now struggling with a 99% valuation cut, as reported by Simplilearn Co-founder and COO Kashyap Dalal.

Dalal highlighted the importance of “financial discipline” for startups, pointing out that Byju’s troubles started after engaging in ‘financial engineering’ post multiple funding rounds. The company’s founder, Byju Raveendran, informed employees that funds raised through a rights issue are currently held in a separate account at the insistence of key investors.

By underwriting loans for parents purchasing their product, Byju’s found itself in a cycle that spiraled out of control, leading to significant financial issues. Dalal stressed the need for all companies, not just in edtech, to prioritize financial discipline to avoid similar pitfalls.

Despite Byju’s initial success being attributed to a strong product and business model, poor decision-making resulted in its current challenges. Dalal emphasized the importance of building a long-term sustainable business rather than making short-term gains.

Industry leaders have voiced concerns over governance issues plaguing well-funded startups, contributing to a bearish trend in the ecosystem. As Byju’s struggles to navigate its financial woes, the incident serves as a cautionary tale for startups to prioritize financial stability and sustainable business practices.

In conclusion, the downfall of Byju’s serves as a stark reminder of the consequences of neglecting financial discipline, impacting not only the company itself but also the broader startup ecosystem. With lessons to be learned from Byju’s missteps, startups are urged to prioritize sound financial management to ensure long-term success and sustainability.