Image Recognition
Edtechs may face more scrutiny on revenue recognition in the aftermath of Byju's crisisFollowing the crisis at Byju's, the world's most valued edtech company, there has been a growing focus of investors and advisors on examining the revenue recognition practices of India's edtech start-ups in their portfolios. In contrast, other edtech companies such as Lido Learning, which has since declared bankruptcy, experienced substantial revenue growth in FY20-21. Aggressive revenue recognition refers to a company's strategy of inflating revenue figures by reporting gross revenue while deferring expenses, which artificially mitigates losses on paper. The growing scrutiny by investors on the revenue recognition practices of edtech start-ups has the potential to lengthen the fundraising process for these companies. This downtrend has also impacted the valuations of edtech companies in India, prompting United States-based asset management companies (AMC) to mark down the fair values of certain Indian edtech firms.