India’s booming tech sector suffers a big blow as Byju’s and Paytm plunge into crisis
Workers inspect smart phone components at the visual inspection area of the surface mount technology workshop inside the Realme factory in Greater Noida, India: Anindito Mukerjee | Bloomberg | Getty Images
Anindito Mukerjee | Bloomberg | Getty Images
India’s booming tech sector has suffered a major blow as startup darlings Byju’s and Paytm plunge into crisis amid regulatory scrutiny and alleged mismanagement.
“There’s been a bit of a reality check for the last couple of years in terms of how to keep corporate governance practices up at a level which is sustainable and at a world class level,” said Karan Mohla, general partner at venture capital firm B Capital Group.
Paytm, once a fintech star in India, has been mired in controversy since March 2022, after the Reserve Bank of India ordered the fintech giant’s banking unit to stop onboarding new customers with immediate effect.
A subsequent audit “revealed persistent non-compliances and continued material supervisory concerns in the bank,” the central bank said on Jan. 31.
Starting from March this year, Paytm was not allowed to continue accepting fresh deposits in its accounts or its digital wallet.
Yet to be profitable, Paytm is also reportedly being probed by the federal anti-fraud agency on possible violations of foreign exchange laws.
On Feb. 26, One97 Communications, the parent company of Paytm, said in an exchange filing that founder and CEO Vijay Shekhar Sharma had resigned from the board of Paytm Payments Bank.
During the pandemic, Paytm capitalized on the digital payments boom in India, reporting a 3.5 times growth in transactions. Investors like SoftBank, Alibaba Group and Ant Financial bet big on Paytm, but its stock price has slumped more than 70% since its IPO in November 2021.
SoftBank and Ant Group are now reportedly cutting their stakes in the payments company, according to local media.
“Venture capital investors and founders have a greater responsibility to make sure that governance in the company is sound,” said Ashish Wadhwani, co-founder and managing partner of IvyCap Ventures.
Byju’s, India’s most valuable startup at one time, is also struggling to survive. The Indian edtech startup has seen its valuation plummet from $22 billion to $1 billion, and faces a series of problems including alleged accounting irregularities and purported mismanagement.
The unprofitable company, which offers services ranging from online tutorials to offline coaching, attracted billions of dollars from investors during the pandemic when traditional classrooms were shuttered.
The company is under scrutiny after the Indian government reportedly ordered an inspection into Byju’s finances and accounting practices, according to Bloomberg on July 11.
“I think that the sector is going to be permanently scarred because of the development with Byju’s, because people are not going to look at that as an isolated problem. They will look at it as a larger edtech viability problem,” said Bhavish Sood, general partner at India-based venture capital firm Modulor Capital and former research director with consulting firm Gartner.
Inflated valuations
The Covid-19 pandemic accelerated the digital revolution in India.
From online education and food delivery to online shopping, tech companies saw a surge in demand for their products and services.
The government recognized more than 14,000 new startups in 2021 — compared to only 733 between 2016 and 2017, according to India’s Economic Survey for 2021-2022.
As a result, India became the third-largest startup ecosystem in the world after the U.S. and China, the survey showed.
In 2021, a record 44 Indian startups achieved unicorn status — valued at $1 billion or more, taking the overall tally of unicorns in India to 83.
Venture funding into Indian startups hit a record $41.6 billion in 2021, according to data from global startup data platform Tracxn.
But the tide has since turned.
Funding for Indian startups plunged 83% in 2023 from the record high $7 billion in 2021, as global venture funding dried up amid rising macroeconomic uncertainties, such as increased interest rates.
Byju’s valuation plummeted 95% after investors cut their stakes in multiple rounds. It was most recently slashed to $1 billion, after BlackRock downsized its holdings in Byju’s last month, according to media reports.
The regulatory crackdown also hit Paytm hard, slashing its valuation to $3 billion as of Mar. 7, according to LSEG data. That’s a sharp decline from the nearly $20 billion valuation when it was listed in November 2021.
“There is no doubt that valuations were very stretched in 2021, early 2022,” said Wadhwani from IvyCap Ventures. “Some companies have done IPOs at valuations which were just not tenable and that caused a lot of stress in the market.”
Byju’s is facing a cash crunch, announcing in January that it was raising a $200 million rights issue of shares to clear “immediate liabilities” and for other operational costs. The firm is reportedly struggling with debt repayments and paying staff salaries.
“Companies which don’t have cash are being forced to do down rounds,” said Wadhwani, referring to funding rounds in which firms raise capital at a lower valuation than a previous round.
“Companies which don’t have a sustainable model are obviously going to go out of business because no one is going to fund them at crazy valuations,” he added.
“But also again, businesses which are run on fundamentals will continue to get funding.”
A person walks by a sign for Micron Technology headquarters in San Jose, California, on June 25, 2025.
Justin Sullivan | Getty Images
Micron reported better-than-expected earnings and revenue on Tuesday as well as a robust forecast for the current quarter.
The stock rose in extended trading.
Here’s how the company did in comparison with the LSEG consensus:
- Earnings per share: $3.03, adjusted, vs. $2.86 expected
- Revenue: $11.32 billion vs. $11.22 billion expected
Micron said revenue in the current period, its fiscal first quarter, will be about $12.5 billion, versus the $11.94 billion average analyst estimate per LSEG.
The company said it had $3.2 billion, or $2.83 per share in net income, versus $887 million, or 79 cents in the year-ago period.
Micron shares have nearly doubled so far in 2025. The company makes memory and storage, which are important components for computers. Micron has been one of the winners of the artificial intelligence boom. That’s because high-end AI chips like those made by Nvidia require increasing amounts of high-tech memory called high-bandwidth memory, which Micron makes.
“As the only U.S.-based memory manufacturer, Micron is uniquely positioned to capitalize on the AI opportunity ahead,” Micron CEO Sanjay Mehrotra said in a statement.
Overall company revenue rose 46% on a year-over-year basis during the quarter.
Micron’s largest unit, which sells memory for cloud providers, reported $4.54 billion in sales during the quarter, more than tripling on a year-over-year basis.
However, the company’s core data center business unit saw sales decline 22% on an annual basis to $1.57 billion in revenue.
WATCH: AI-led bull market set to continue, says Wells Fargo’s Ohsung Kwon
Technology
YouTube to allow creators banned for Covid-19, election misinformation to apply for reinstatement
Jaque Silva | Nurphoto | Getty Images
Google-owned YouTube on Tuesday said it will soon allow previously banned accounts to apply for reinstatement, rolling back a policy that had treated violations as permanent.
The change applies to channels removed for posting Covid-19 or election-related misinformation, according to a letter from Alphabet lawyer Daniel Donovan to House Judiciary Chair Jim Jordan, R-Ohio. Previously, those types of offenses carried lifetime bans.
“Today, YouTube’s Community Guidelines allow for a wider range of content regarding Covid and elections integrity,” Donovan wrote.
YouTube wrote on X that it will be a limited pilot project open to a subset of creators as well as channels that were terminated under policies the company has since retired. YouTube also said its new reinstatement program will launch soon.
Among channels previously banned under those rules were some associated with Deputy FBI Director Dan Bongino, former Trump chief strategist Steve Bannon and Health and Human Services Secretary Robert F. Kennedy Jr. It’s not yet clear whether those channels will be reinstated.
This move follows mounting Republican pressure on tech companies to reverse Biden-era speech policies on vaccine and political misinformation. In March, Rep. Jordan subpoenaed Alphabet CEO Sundar Pichai, alleging YouTube was a “direct participant in the federal government’s censorship regime.”
In 2021, YouTube said it would remove content that spread misinformation about all approved vaccines.
Donovan wrote that during the pandemic, senior Biden administration officials pressed the company to remove certain Covid-related videos that did not technically violate YouTube’s policies.
In the letter, Donovan said this pressure was “unacceptable and wrong.”
YouTube ended its stand-alone Covid misinformation rules in December 2024, according to Donovan’s letter.
YouTube “will not empower third-party fact-checkers” to moderate content and will continue to enable “free expression” on the platform, Donovan wrote. While Donovan writes that YouTube has not used fact-checkers, the platform has produced programs that are meant to label context on videos.
Similarly, Meta said in January that it had eliminated its fact-checking program on Facebook and Instagram.
YouTube has a feature that will display information panels with links to independent fact checks under videos. The feature says it provides more context on videos across YouTube with information from third-party sources.
In 2017, Google launched a fact-checking tool that would display labels on search and news results.
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