India’s Byju’s lost more than $20 billion in valuation — what went wrong with the startup darling?

Byju’s, once India’s most valuable startup, has seen a sharp reversal in its fortunes after a series of setbacks, including alleged accounting irregularities and purported mismanagement.

Valued at $22 billion in 2022, the Indian edtech startup’s valuation has since plummeted 95% after investors cut their stakes in multiple rounds. It was most recently slashed to $1 billion, after BlackRock downsized its holdings in Byju’s last month, according to media reports.

The company, which offers services ranging from online tutorials to offline coaching, attracted billions of dollars from investors across the world during the Covid-19 pandemic when online education services were on high demand.

Last Friday, major Byju’s shareholders, including Netherlands-based global investment group Prosus, voted to oust founder Byju Raveendran as chief executive officer.

Investors who attended an extraordinary general meeting “unanimously passed all resolutions put forward for vote,” which also sought to change the board, according to a statement Prosus sent CNBC.

“These included a request for the resolution of the outstanding governance, financial mismanagement and compliance issues at Byju’s; the reconstitution of the Board of Directors, so that it is no longer controlled by the founders of [Think & Learn Private Limited]; and a change in leadership of the company,” said the statement issued last Friday.

However, Byju’s rejected the resolutions, saying the extraordinary general meeting was “invalid and ineffective” due to a low turnout attended only by a “small cohort of select shareholders.”

“The passing of the unenforceable resolutions challenges the rule of law at worst,” the Bengaluru-headquartered firm said in a statement to CNBC.

“Byju’s emphasizes that the Honorable Karnataka High Court had granted interim relief, clearly stating that any decisions made during the meeting would not be given effect until the next hearing,” it said.

“As the founders did not participate in the meeting, the quorum was never legitimately established, rendering the resolutions null and void.”

In 2011, Raveendran — a teacher and engineer — founded Think and Learn Private Limited, the parent company of Byju’s. Raveendran was born into a family of teachers in Azhikode, a small village in southern India.

The company claimed that the launch of its flagship product, Byju’s — The Learning App, saw two million downloads within three months of its rollout in 2015. The app offers interactive videos, games and quizzes to help students with everyday classes as well as exam preparation.

The Covid-19 pandemic brought exponential growth to Byju’s when traditional classrooms shuttered, leading to skyrocketing demand for online learning.

In November, Byju’s co-founder Divya Gokulnath told CNBC the company had more than 100 million monthly students on its platform.

Byju’s growth attracted global investors and significant funding rounds including a $1.2 billion in debt financing in November 2021, according to company database service Crunchbase.

Flush with funds, Byju’s went on an acquisition spree between 2017 and 2021.

Some of Byju’s biggest acquisitions include Aakash Educational Services, a leading test-prep company in India, which it reportedly paid about $950 million for in 2021.

Other strategic acquisitions include U.S-based kids’ digital reading platform Epic ($500 million), educational games maker Osmo ($120 million) and online coding school WhiteHat Jr.

“2022 would be the year of maximum acquisitions, nine big ones. So the pandemic was great, because it solved the biggest challenge of people not knowing about how online education can be a part of mainstream learning,” Gokulnath told CNBC in November last year.

“But the disadvantage was also that we had to grow at a frenetic pace. We had to grow to ensure that we were able to meet the demand,” she added.

The end of pandemic restrictions saw a slowdown in online learning and Byju’s had to let go of at least 1,000 employees in June last year, according to tech jobs tracker layoffs.fyi.

In the same month, the company’s auditor Deloitte and three of its prominent board members severed ties with Byju’s, as questions loomed around the company’s financial health and governance practices, according to a Reuters report.

Byju’s filed its financials for 2022 in November last year, after a year-long delay due to governance issues and its auditor’s resignation. Operating losses came to 24 billion Indian rupees (about $290 million) for its core online education business.

“One thing that we should have focused on earlier is governance,” Gokulnath told CNBC in the November interview. “That’s something that we’re constantly building on to the next one year. I’m hopeful that we’re also able to stand on the governance side.”

Byju’s has reportedly struggled to repay a $1.2 billion loan and is said to be struggling with staff salaries as well. The firm said in January it is raising a $200 million rights issue of shares to clear “immediate liabilities” and for other operational costs.

The company’s U.S. unit Alpha filed for Chapter 11 bankruptcy proceedings in a Delaware court on Feb. 1.

Byju’s did not respond to CNBC’s request for comment.

On whether Byju’s has lost the confidence of shareholders, Gokulnath said in November: “We would like to believe that we have not, because at all time, we’ve kept the interest of our students, parents, employees and shareholders in mind and what we are doing, we are doing to build this back together.”