Amidst the funding winter and uncertain global macroeconomic environment, U.S.-based investors have marked down their valuations of Indian start-ups such as Byju's and Meesho.
BlackRock Inc, a U.S.-based asset management company, has marked down its valuation of edtech unicorn Byju's by 62% to $8.4 billion. According to its filings with the US Securities and Exchanges Commission (SEC), the asset management company has pegged the value of its 2,279 shares in Byju’s at over $4.04 million, effectively estimating the company's fair value at $8.4 billion as of FY23.
The development comes a month after, BlackRock, which owns less than 1% stake in Byju's, reportedly slashed the valuation of the edtech major from $4,600 per share in April 2022 to $2,400 a share as of December-end 2022. Blackrock, which manages over $10 trillion in assets, had first entered Byju's roster of marquee investors at a $12-billion valuation in 2020. However, the valuation is much more 'respectable' than what Naspers-owned Prosus had valued the Bengaluru-based startup last year. The South Africa-based new-age tech focussed investor had pegged the fair value of its 9.67% stake in the edtech's parent, Think & Learn, at $578 million at the end of September quarter last year, valuing the company at $6 billion. Though the narrative spun around the markdown was that it was just an accounting treatment, valuing a unicorn's stake at its fair value is indicative of the mounting challenges for the company since its last fundraise of $250 million in October 2022.
Divya Gokulnath, co-founder of Byju's, had told Fortune India that the company would not be renewing its sports partnerships. The company, which has raised over $5 billion, has branding tie-ups with the Board of Control for Cricket in India, the International Cricket Council, and the Federation Internationale de Football Association.
The markdown in its valuation comes at a time when Byju's is already witnessing scrutiny by the Enforcement Directorate (ED) under the provisions of the Foreign Exchange Management Act (FEMA). Last month, ED conducted searches at the company’s 3 premises in Bengaluru under the provisions of FEMA. The company is also facing litigation in Delaware Court, through its US-based subsidiary Alpha Inc, on behalf of the lenders, who are owed $1.2 billion.
Byju's, which was once valued at $22 billion, went on an acquisition spree over the past few years. The edtech firm splurged $2.5 billion on acquisitions that included Aakash Educational Services (test prep specialist), the US-based Epic, Tynker (kids' coding platform), Great Learning (professional education firm) and Toppr (exam prep platform).
Meanwhile, Fidelity Investments, another U.S.-based asset management company, has marked down the valuation of the ecommerce platform Meesho by nearly 10% to $4.4 billion. According to an SEC Filing, Fidelity owns 33,000 shares in Meesho via the Fidelity Central Investment Portfolio. It has now slashed the value of its investment by 9.6% to $2.34 million from $2.59 million.
Fidelity Investments had co-led a Series F funding of Meesho worth $570 million, at a valuation of $4.9 billion in 2021. Like its peers, Meesho is also aiming to achieve profitability amidst a dwindling macroeconomic environment. Earlier this month, Meesho laid off 15% of its workforce, which translates into 251 job cuts. This is Meesho's second round of layoffs in about a year. Before this, the company had cut its workforce by 150.