Byju’s Weighs Options for WhiteHat Jr as EdTech Group Looks to Cut Expenses
Background on Byju’s and WhiteHat Jr Acquisition
Byju’s, India’s most valuable startup at a valuation of $22 billion, is considering winding down its coding platform WhiteHat Jr, which it acquired over two years ago at an enterprise value of $300 million. The discussions come at a time when the edtech group is cutting costs across the company, having laid off thousands of employees and pared back on marketing expenses in recent quarters.
WhiteHat Jr was once touted as one of Byju’s best acquisitions, but it has drawn considerable criticism for its misleading claims, quality of teaching, and aggressive tactics to court students. The coding unit infamously sued some of those critics, a move that attracted even more backlash. It later withdrew the lawsuit.
Criticisms and Controversies Surrounding WhiteHat Jr
WhiteHat Jr’s founder Karan Bajaj left Byju’s a year after the acquisition, and according to one of the sources, has engaged with investors in recent weeks to explore raising a funding round for his new startup. He couldn’t be immediately reached for comment.
Byju’s, which counts Sequoia India, Lightspeed Venture Partners, Tiger Global, B Capital, UBS, and General Atlantic among its backers, has spent the past year addressing many criticisms leveled at the firm. Byju’s said last month that its sales people no longer visited students’ homes to pitch to their parents, and the firm now conducts a test to determine whether a kid’s parents can afford to subscribe to the service before signing them up.
Financials and Growth Metrics
A considerable amount of the payout for WhiteHat Jr was tied to future growth metrics, which meant that Byju’s eventually spent less than $235 million on the acquisition deal. The coding unit has not independently generated profits, with one source stating that it was until recently spending about $14 million a month.
Byju’s Response and Plans for WhiteHat Jr
A Byju’s spokesperson said the company is "actively evaluating all our business units to ensure that they are aligned with our path to profitability," but has no plans of shutting down WhiteHat Jr. "At the group level, in accordance with its steadfast commitment towards achieving operational profitability, BYJU’S is constantly evaluating and optimizing its business operations towards global growth," a Byju’s spokesperson said.
"We are merely optimizing it for organic and efficient growth. We remain fully committed to delivering world-class educational experiences and solutions that empower students to achieve their full potential."
Industry Context and Impact
Byju’s acquisition of WhiteHat Jr was one of the most significant deals in the Indian edtech space, reflecting the growing demand for coding education among children. However, the controversy surrounding WhiteHat Jr has raised questions about the quality of Byju’s acquisitions and the company’s ability to manage its diverse portfolio.
The decision on whether to wind down WhiteHat Jr will have significant implications for the Indian edtech industry, which is already facing intense competition and regulatory scrutiny.
Conclusion
Byju’s weighing options for WhiteHat Jr comes at a time when the edtech group is looking to cut expenses and eliminate business units that are not aligned with its path to profitability. The decision on whether to wind down WhiteHat Jr will have significant implications for the Indian edtech industry, which is already facing intense competition and regulatory scrutiny.
Sources
- Three investor sources familiar with the matter
- One person familiar with the matter
- Byju’s spokesperson
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