The Rise and Fall of India’s Startup Giants: Lessons from the Paytm and Byju’s Saga

India’s startup ecosystem has been shaken by the recent struggles of two of its most prominent players, Paytm and Byju’s. Once hailed as the flag bearers of India’s technological revolution, these companies have seen their valuations plummet, raising concerns about the future of India’s startup landscape.

Paytm, a fintech giant, and Byju’s, an online education platform, were once the darlings of investors and the media alike. Paytm’s success story began with its pioneering role in digital payments, transforming the way Indians transacted online. Byju’s, on the other hand, offered a revolutionary approach to education, providing standardized online learning solutions to students across the country.

The early successes of Paytm and Byju’s were emblematic of India’s growing influence in the global tech scene. As Prime Minister Narendra Modi championed initiatives like “Startup India,” these companies thrived, attracting billions in funding and garnering international attention.

However, the tide began to turn for both companies. Paytm, which was valued at nearly $19 billion at the time of its IPO, saw its valuation plummet to just $3 billion. Byju’s, once valued at $22 billion, faced a similar fate, with its valuation dropping by 99% following a $200 million fundraising round.

Indian team working together and looking on a screen of laptop

The reasons behind the downfall of these once-mighty startups are varied. Paytm’s troubles stemmed from regulatory issues, particularly with its affiliate bank, which was effectively shut down by regulators due to “persistent non-compliances.” This led to a loss of confidence among investors, with major backers like SoftBank reducing their shareholdings in the company.

Byju’s, on the other hand, faced challenges related to its rapid expansion through mergers and acquisitions. The company’s aggressive growth strategy led to conflicts with creditors and ultimately resulted in the resignation of its auditor, Deloitte. Investors, including the Chan Zuckerberg Initiative and Prosus, exited the board and called for a change in leadership, further adding to the company’s woes.

The decline of Paytm and Byju’s has sent shockwaves through India’s startup ecosystem, prompting a reevaluation of the sector’s prospects. A survey of 400 Indian founders conducted by Inc42 revealed that 44% of respondents faced increased scrutiny from financial backers in 2023. However, more than half rated investors’ corporate governance measures as only moderately or barely effective, highlighting the need for improved oversight in the sector.


The fallout from Paytm and Byju’s struggles is likely to be felt across the entire startup ecosystem. Companies that were once seen as the future of Indian tech are now trading below their IPO prices, despite benchmark indexes reaching record highs. This shift in sentiment indicates that the era of easy money for Indian startups may be coming to an end.

The challenges facing Paytm and Byju’s serve as a cautionary tale for India’s next wave of startups. As companies like Swiggy and Ola Electric prepare for their own IPOs, they will need to tread carefully and ensure they have solid governance structures in place to avoid the pitfalls that befell their predecessors.


The decline of Paytm and Byju’s serves as a sobering reminder of the risks inherent in the startup ecosystem. While India’s tech sector continues to show promise, it is clear that investors are becoming more discerning, and companies will need to demonstrate strong fundamentals and robust governance practices to succeed in this competitive landscape.


By Ghising

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