A LARGE EDUCATIONAL STARTUP IN INDIA HAS COME TO BANKRUPTCY

The Board of Directors of Lido Learning has decided to file for bankruptcy in the Mumbai Court. This happened after the firm got rid of 1,200 employees. The bankruptcy is expected to take place in accordance with section 10 of the Insolvency and Bankruptcy Code (IBC), in force in India since 2016.

The technology startup, founded in 2019, offered those who wanted to master online courses in mathematics, programming, English and natural sciences. The basis of the client audience was school graduates. As an investment, the organization raised about $24 million as a result of several stages of financing.

In the fall of 2019, the founder of the company, Sahil Shot, was accused of stealing 1,180 secret files from Zico Learning. The head of the company then called this information false insinuations that competitors are trying to use to extort money.

By September 2021, the firm had attracted about $10 million in investments from Unilazer Ventures, owned by Indian tycoon Ronnie Skrivala. From a small startup, the organization gradually began to turn into a large business with a turnover of up to $ 100 million. The company's management did not hide that it was planning aggressive expansion in various Indian states and announced its exit abroad.

It is known that the organization had plans to launch its product in the UK, Australia, New Zealand and Southeast Asian countries. The flagship computer program using the "pair learning" method allowed organizing the process in a mode where there were only two students per teacher. Thus, the educational process could take place in an in-depth format, and all issues would be resolved in real time.

However, the financial problems that began during the pandemic turned out to be ruinous for Lido Learning. The company's revenue has almost halved. The attempt to attract funds from Chinese investors was unsuccessful, as the Indian government changed the rule for foreign investment in 2021.

As a result, the company defaulted on many obligations. More than 50 complaints from clients were sent to the law enforcement agencies of Delhi, Bangalore and other cities. In February 2022, the company ceased operations. Employees, some of whom were dismissed, and without receiving a salary, began to seek help from lawyers, using social media platforms for this.

According to experts, the global ecosystem of startups is experiencing a crisis. Some companies were forced, like Lido Learning, to lay off employees by closing online platforms. The EdTech sector was particularly affected in India, where the number of layoffs (more than 2 thousand specialists) turned out to be the largest in 2022. The companies Udayy and Crejo.Fun, which also worked in the field of educational technologies, stopped their economic activities. The decline of the pandemic and the subsequent opening of schools and colleges where students are physically present during classes have undermined the online market for paid educational services.

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Tags: bankruptcy, india, education