Indian Startups Are Overvalued, $22 Bn Byju’s Worth Zero: HSBC Study

HSBC's recent research note suggests that Byju’s, the country’s Edtech giant once valued at $22 billion, is now considered to have no value. 

The Bengaluru-based startup faced resignations, and financial reporting issues and fell short of its target by over 50% due to governance issues.

It derailed a $1 billion fundraising deliberation by Byju's.

Prosus publicly criticised the startup for disregarding advice. 

Byju’s raised $200 million at a post-money valuation of about $250 million this year, which is now legally disputed by some of the largest investors, including Prosus.

HSBC's research note estimated Prosus' 10% stake in the Indian startup to be worth zero due to ongoing legal cases and funding issues. 

Overvalued Indian Startups:

The bank also noted a decrease in the value of several other startups.

The bank's new valuations are, Pharmeasy at $2.8 billion (down from a high of $5.6 billion), Meesho at $2.5 billion (down from $4.9 billion), DeHaat at $400 million (down from $800 million), and ElasticRun at $800 million. Additionally, Stack Overflow's value is now estimated at $900 million, and GoodHabitz at $100 million (down from $200 million).

“We apply a 50% discount to the latest funding round/acquisition price for assets where the last round is older than six months to account for the recent correction in similar Edtech/SaaS companies’ public sector multiples,” HSBC added.