The making of a loan crisis at Byju’s


“Come fall in love with learning,” said the photo of a cherubic kid wearing oversized glasses on the receipt the parent waved at the camera. But there’s little love in words she and three other parents used in the video—a complaint to the Chennai Cyber Crime Department.

“I did not know they were signing me up for a 12-month loan for Rs 50,500 ($729) from some company called Capital Float,” she said.

“They took our biometrics saying it was for EMIs,” said another.

“They” was Byju’s, India’s edtech behemoth.

Huge Revenue

With revenue of Rs 1,430 crore (a little over $200 million) for the year ended 31 March and a valuation of over $5 billion, founder Byju Raveendran’s eponymous startup is already an unparalleled success story, and not just for the edtech sector.

Since the launch of its learning app in 2015, the company has known no barrier to growth. Soaring revenues, users and even celebrity endorsements have bolstered its growth and put a significant distance between Byju’s and its nearest competitors like Toppr and Extramarks. Raveendran, a regular fixture across education and start-up conferences worldwide, has ushered in an era of homegrown entrepreneurs with global ambitions.

“I strongly believe that the next big education company will be built in India,” Raveendran said in a previous interview with The Ken for an earlier story.

All the fanfare and glowing PR, however, masks systemic issues with how Byju’s products are marketed, sold and paid for. Even a cursory internet search throws up a dense litany of allegations of mis-selling and unwanted loans pushed on to customers by Byju’s sales executives.

On the one hand are vocal parents, who’ve aired their complaints to anybody willing to listen. On the other are the third-party loan providers who are being burnt by Byju’s growth-at-all-costs sales tactics, unwilling to talk. Riding on Byju’s growth spurt was supposed to be a secure way for lenders such as Capital Float to power their loan book. Instead, they are smarting from accusations of cheating and harassment by the very borrowers they acquired through Byju’s.

Over several weeks, The Ken analysed 110 unique complaints spread over 14 sources, including consumer complaint forums, Facebook, Twitter and even the Google Play Store. A series of thorough conversations with some of these complainants and lenders subsequently showed how Byju’s sales processes are set up to sell products using unsecured loans to an upwardly mobile, middle-class population.

At risk is the nascent and fragile trust India’s edtech sector has just started building with Indian parents, who consider their products a solution to dealing with the inadequacies of a broken education system.

The Pitch

The Byju’s sales pitch is a fascinating mix of performance, academic counselling and the tried-and-tested sales tactic of “try now, pay later”. The Ken spoke with 10 current and former Byju’s business development associates—BDAs, or counsellors, as the company usually calls them—to unravel a long, carefully planned process to guarantee a sale. And sometimes obfuscating a whole bunch of details key to the sales process.

“When we counsel parents during the sales pitch, we show them how far behind their child is in their conceptual understanding of maths and science topics. We exploit the need for an alternative to schools and tuition centers,” says a Delhi-based former BDA, who worked with Byju’s for over a year. All of the BDAs spoke to The Ken on the condition of anonymity since they either work for rival edtech platforms now, or are still at Byju’s.

As The Ken reported earlier, Byju’s BDAs have a weekly sales target of Rs 2 lakh ($2,876), comparable to targets at large consumer goods companies. Byju’s funnels a majority of its sales leads from its free app. Parents download the app after seeing a Byju’s ad or hearing about it from another parent or friend. This app exists primarily to let parents sample Byju’s lessons. The actual lessons are delivered via a tablet pre-loaded with a Byju’s SD card.

“Once downloaded, we track the performance of the child through this app, the kind of activities attempted, and then call the number to book a session,” says a Haryana-based former BDA. Every employee, he says, needs to book at least 15 “counselling sessions” a week.