It needs desire and ambition to make a business successful. However, achieving success often leads to greed, which can further drown the enterprise in the trenches. The greed to dominate the market can lead to bankruptcy, just as it recently happened to an Edutech giant Lido Learning.
Bankruptcy – Lido Learning at closure
A recent report revealed that the EduTech firm Lido Learning which had earlier sought the option of a merger is now on the verge of bankruptcy proceedings. The cash-strapped struggles of the company in paying its teachers and former employees led to insolvency.
On 5th of September, during a general meeting, The Ministry of Corporate Affairs (MCA) filings showed that the Lido Learning company’s board passed a resolution to apply to section 10 of the insolvency and bankruptcy code. According to the regulatory filings, the company is unable to pay its debts.
The filing stated, “The consent of the shareholders be and is hereby accorded to file an application/petition – initiation of Corporate Insolvency Resolution Process by the corporate applicant, be filed before the National Company Law Tribunal, Mumbai Bench so as to resolve its debts.”
As per a report by Entrackr, the company is yet to file its financials for FY22. Lido witnessed a significant 3 times growth in revenue to Rs 10.9 crore from Rs 3.62 crore in FY20 as per its annual financial statements with RoC. Annual losses of the company also surged 35 per cent to Rs 58.75 crore in FY21 which stood at Rs 43.52 crore at the end of March 2020.
It is evident statistically that Lido Learning is under a dilapidated scenario. In the aftermath of students returning to their physical classrooms, EduTech giants like Lido among others are facing the brunt leading to their existential crisis.
Read more: The billion-dollar scam called Edu-Tech sector in India
The expected rise and evident fall of Lido Learning
The 2019 established Mumbai based Indian educational technology start-up focuses on providing online education in Maths, Science, English, and Coding to students from class KG – 10. Lido Learning was started with a class structure to understand, learn, revise and practice. It claimed “No empty promises. Just better marks. Guaranteed.”
The enterprise set up by Byju’s vice-president Sahil Sheth was once India’s fastest-growing edtech start-up. It hired over 500 online tutors across the country in April 2020. Its Founder and CEO had said, “we needed to grow and expand faster than we had expected, to react to students across India having their studies interrupted by COVID-19.” Although, the edtech start-up was established with an aim to create a buzz in the market. However, it struggled in paying its teachers and other employees.
As per Forbes India, Lido Learning’s revenue did jump significantly in FY21 but its losses also widened.
Apart from this, the company fired close to 200 employees in February amid a cash crunch, showing its dilapidated state. As per reports, it has yet to pay the January salaries of several employees that it had laid off.
Lido Learning’s trials for solidity
For those unaware, it’s not the first time that the company’s closure is hovering over it. The apparent closure of edtech player had been a buzz for some time now.
Therefore, with a pretext of achieving stability, in September 2021, the company claimed that it had raised $10 million which is about Rs 73.4 crore, from Ronnie Screwvala’s Unilazer Ventures, taking its overall funding to $20 million.
Apart from this, Lido Learning was also in active talks with Reliance Industries for a potential buyout in June. However, the fruits didn’t reap as the spokesperson of Reliance said, “We would like to point out that the information that you have is not true. We deny having any interest in the company.”
All these business strategies were adopted with an aim of stabilization. However, nothing seemed to be working. Further, it set another setback for the EduTech sector as a whole.
Read more: BYJU’s is (almost) bankrupt
The Edutech sector is failing
With the repercussions of the pandemic, it can be seen that investments around the globe continue to dampen. The sector is facing the brunt of a funding slowdown. Several ed-tech firms have shifted to cash-conservation efforts in a bid to increase their cash runway.
Reportedly in August, Vedantu laid off another 100 employees after sacking 624 full-time and contractual employees in May. It earlier laid off its sales team as a part of a restructuring exercise. The company’s co-founder and chief executive Vamsi Krishna blamed global macro-headwinds and impending recession fears as the major reasons for layoffs.
Apart from this, Unacademy cofounder Gaurav Munjal had also warned employees of the ‘funding winter’ in May. It came after the Unacademy Group fired around 1000 contractual and full-time employees across its core business and group companies.
Further as reported by TFI, the edtech giant BYJU is also almost bankrupt. The company’s money dried up in buyouts and the shifting of business to offline mode limited the company’s resources of revenue. The situation has become so critical that BYJU is now struggling to fulfil its payment promises.
One after the other, the EdTech giants are turning into ruins. The consecutive decline of the aforementioned giants with Lido Learning filing insolvency clearly depicts the beginning of the end of education technology.
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