BYJU’S scam: Is there a question mark on the ed-tech’s buisness model?

With recent speculations over Byjus and their business model, the ed-tech giants have fallen under a strict scrutiny, lets take a look at this thread.

Role of marketing in the BYJU’s scam

The main key of their marketing strategy is a mental strain on both parents and children and plays a huge role in BYJU’s scam. The children usually get asked tough questions, which they eventually cannot answer. And the parents are pressured into buying their packages.

BYJU's scam
study stress

Some customers have also complained about not receiving the promised services by the company, and when called for queries, the company ignored the calls. Their campaigns and advertising strategy also play a huge role in increasing the market.

The company opts for Bollywood stars for flashy campaigns and ambassadors for the promotion to weasel people in the BYJU’s scam.

The company knows the essentiality of admiration of both young and old individuals towards Bollywood celebrities, hence, alluding people to invest in the service.

Various customers have also complained about severe calls and cold pitches indicating not to invest in BYJUs. Their kid will be left behind in the future.

The company uses a do-or-die scheme (either purchasing the byju’s product or risking losing your kid’s career). Their service packages cost a lot of money; hence these infamous marketing techniques help the company bring profit.

NCPCR summon BYJU’S

The EdTech company is also accused of wrong selling practice. The National Commission for Protection of Child Rights (NCPCR) has also summoned Byju Raveendran on December 23  along with all the information of courses provide by the company for children.

NCPCR Chairperson Priyank Kanoongo highlighted BYJU’S is breaching contacts of both children and their parents in order to threaten them into buying the course.

BYJU's scam

BYJU’S has also spoken about the new BYJU’s scandal, a BYJU’S spokesperson said

“With more than 150 million registered students and with the top-of-the-mind recall that the BYJU’s brand has in India, we do not need to buy or use external databases. We emphasize that our lead pipeline comprises exclusively of our app users, walk-ins and incoming requests for consultation. BYJU’s is ranked No. 19 in the coveted Kantar list of India’s most trusted brands. We do not need to and we never make cold calls or unscheduled walk-in visits. We strongly refute any allegation that indicates otherwise.”

BYJU’s scam and funds

In September 2021, a US-based company was acquired worth Rs 1,200 crore in BYJU’S through a part of a Series F round. They bought the share at Rs 285,072 per share.

Many other investors were included in the Series F round as well. According to Morning Context, investors include:

Edelweiss at Rs 344.9
IIFL at Rs 110 crore
Verition Multi-Strategy Master Fund at Rs 147 crore
XN Exponent Holding at Rs 150 crore

BYJU’s scam and expansions

This investment has become a rising issue after the circulation of reports. According to the report, some of the money in Rs 6,300 crore private equity investment in BYJU’s company has yet to reach the education company.

In contrast, the company has received a few funds and is tracking the other unreceived funds.

BYJU's scam
business expansion

BYJU’s in March also announced to raise almost Rs 6,300 crore from companies Sumeru Ventures, Vitruvian Partners, and BlackRock.

The infamous ed-tech company was also a part of a funding round, where an investment of $400 was made by the company’s Founder and CEO, Byju Raveendran itself.

This pattern of investment and funding has highlighted the company’s suspicious way of including more and more investors. The company has expanded on a huge platform without requiring such investments.

The ed-tech company now has nine companies in India and the US. This ongoing spree of investments and global expansion has made the company seem solely like a money-extraction venture. BYJU’S has spent around 2 billion dollars on expansion

The CEO bought another infamous Delhi-based education venture, Aakash Educational Services (AESL), for almost $950 billion. Among Singapore’s headquarters, Great Learning, for 600 million dollars.

The company treasury is being drained in big investments, and shifting the company to an online mode is starting to put financial constriction on the ed-tech company.

Such difficulties have led the company’s owned branches Toppr and WhiteHatJr, to lay off more than 600 jobs. The reopening of colleges and schools has also strained the company’s profit.

BYJU’s with its successful expansion, should also be providing a world-class education. Unfortunately, the latter isn’t true. Children’s education does not match the company’s influence at all. BYJU’s scam has inflicted many students

Besides, several employees have spoken out about their experience with the company. It was reported that higher authorities would often embarrass the sales department employees if they did not reach their target. Many employees also face layoffs due to the crumbling economic situation of the company.

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