India’s crime-fighting agency searched three premises of edtech giant Byju’s and its founder Byju Raveendran, it said on Saturday, and seized several “incriminating” documents and digital data.
The Enforcement Directorate said it carried out the searches under the provisions of the national anti-money laundering law, but declined to give further details. The agency has carried out several similar probes in recent months, including crypto firms WazirX and CoinSwitch Kuber, phone maker Vivo and news broadcaster BBC.
The agency said “several” complaints from individuals prompted the investigation. As part of the investigation into Byju, which is ongoing, ED said it summoned Raveendran “several” times, but the founder “remained evasive and never appeared during the investigation”.
The research has so far found that Byju raised about $3.4 billion in foreign direct investment during the period from 2011 to 2023. During this period, the startup remitted about $1.1 billion to foreign entities and tagged about 115 million dollars as advertising and marketing spend.
It appears that part of what prompted ED to conduct the probe was the delay in filing the annual financials by Byju. The so-called findings — how much money Byju has raised and later invested in overseas units — have been widely disclosed by Byju and the media before.
“The company has not drawn up its accounts since the 2020-21 financial year and does not have the accounts, audited, which is mandatory. Hence, the veracity of the figures provided by the company are being scrutinized from the banks,” ED said in a statement on Sunday.
Bengaluru-based Byju’s, which is India’s most valuable startup and counts BlackRock, Sequoia India, Lightspeed Venture Partners India, UBS among its backers, called the agency’s searches “a routine inquiry ” and said that the startup maintains complete transparency. with the authorities.
“We have nothing but the utmost confidence in the integrity of our operations and are committed to maintaining the highest standards of compliance and ethics. We will continue to work closely with the authorities to ensure they have all the information they need, and we are confident that this matter will be resolved in a timely and satisfactory manner. We would like to emphasize that it is business as usual at Byju’s,” a spokesperson for Byju’s legal team said in a statement.
“We are committed to providing high-quality education products and services to our customers in India and globally. We remain focused on our mission to transform the way students learn and prepare for their future.”
ED’s statement comes at a time when Byju’s is closing a big round of funding and is gearing up for the IPO of its fitness tutor chain subsidiary unit Aakash.
EdTech giant Byju’s is under India’s financial crime agency radar. The Central Bureau of Investigation (CBI) has reportedly begun probing Byju’s for alleged misappropriation of funds. The investiagtions involve examining Byjus’ subsidiaries and its investments from prominent industrialists and venture capital firms.
The news of Byju’s falling under the radar of India’s financial crime agency has serious implications for EdTech and the start-up ecosystem. It is a good reminder that transparency and compliance should not be viewed as an onerous exercise, but as a necessity and an integral part of doing business. At Ikaroa, we believe that robust financial systems are essential for a vibrant, healthy and equitable startup ecosystem that benefits all stakeholders. Start-ups must adopt good and transparent financial practices in order to foster trust, protect investor equity and ensure success in their venture.