Finale: The collapse of India’s $22bn tech star

0:00Hi, listeners. It's Mikella. This is not an April Fool's joke. This is for real. This is Behind the Money's final episode. So I want to take a moment to say a few things. The Behind the Money podcast was first started at the FT back in 2018 by my predecessor, Amy Keene. I took over a little more than four years ago in 2022 when we relaunched as a weekly show. In the more than 200 episodes since then, we've covered banking crises, the economic fallout from the wars in Ukraine and the Middle East, tariff chaos, and a whole bunch of acronyms, ESG, VC, and SRTs, just to name a few. We've told stories from all over the world.

0:47Kenya, Indonesia, France, Germany, China, and Japan. And as I said in last week's show, it has been a total honor and a privilege to host and produce this show every Wednesday. Since I made the announcement that the show was ending, I've received a number of lovely messages from you listeners. Some of you have shared your favorite episodes with me, or even times when you listen to a show and it helped you out with your own job or professional goals. There are a lot of ways to stay on top of finance and business news today. And I'm grateful that you chose to listen to Behind the Money, whether that's been for a few months or a few years.

1:28I'd also like to extend thanks to the team who've worked with me on this show for much of the last four years. That's Topher Forges, Sam Giavinko, and Safiya Ahmed. And a massive thanks goes out to my colleagues, the brilliant FT reporters and editors, who have shared their work with me for this show every week. we could not have made this without you. Now, for our final episode, we're bringing you what I would say is a classic behind-the-money show. So settle in and enjoy. Your Honor, I would call Will Haller to the stand. Okay, Mr. Halley, please come forward. It's November 2024, inside a courtroom in Delaware.

2:14Please take the stand and remain standing for the oath.

2:17Chris Kay: Please state your full name and spell your last name for the court record. William Hayler, W-I-L-L-I-A-M, Hayler, H-A-I-L-E-R. Do you affirm that you would tell the truth, the whole truth? William Hayler is an executive of an advisory firm based out of Nebraska, and he's traveled to this courtroom to appear as a witness. He's there to answer questions in a case tied to what was once India's best-funded startup. Worth a massive$22 billion. It was the pride of the country's technology sector, a company focused on education tech. It was called Baijus. Why did you write 18 pages and agree to testify today?

3:03I felt like it was the right thing to do. I have been, over the last several months, partying to countless conversations, requests, actions, demands that I believe are not only fraudulent and dishonest, but are bad for the ultimate goals that the company has said they're trying to do, which is educate students all across the globe. Bai Jus was founded by a man with the same name, Bai Jus Ravindran. And in the last few years, he had overseen both the company's swift rise and swift fall. And William Haler had gotten wrapped up in this. From your shoes, what are the potential risks to you professionally and personally from your decision to testify today?

3:56I face, I think, a grave set of potential exposure and liability to whether it's Baiju or any of his friends or associates or affiliates. personally there's a chance based upon my disclosure of actions that i have taken in uh in support or in tandem with baiju may make it impossible for me to continue the work that i love doing and may isolate me from people i've worked with in the past that i hope to continue to work with. This testimony, which we pulled from this case's docket, is just one of several that have come out of Baiju's undoing. William Haler is a small piece of Baiju's collapse. And the fallout of this stretches from India to Dubai to Delaware.

4:58And it's already resulted in millions of dollars worth of U.S. court sanctions. There have also been allegations of witness tampering. And it's cast a long shadow over India's tech industry, raising questions about what the future might hold for the sector. I'm Michaela Tendera from the Financial Times, and this is Behind the Money.

5:33Chris Kay: If I start with a circle, and if I keep on adding circles inside, the last one being just a point. What you're hearing is the voice of Baiju Ravindran. He's explaining a math problem inside a stadium packed with students. So what's going on there is one of the early things that made Ravindran famous, these huge live teaching sessions. He'd stand on stage with giant screens around him, projecting slides while explaining maths problems. That's Chris Kay. He's the FT's Mumbai bureau chief. And he tells me that in India, admission to top colleges often comes down to the results of a single national exam.

6:16Millions of students sit for them every year and they're famously difficult and families spend years preparing for them. These tests are a big deal. And many students will do whatever it takes to get a better score. And that's how Baiju Ravindran got his own start, helping students prepare for these exams. Ravindran actually comes from a pretty modest background. He grew up in a small village in the southern Indian state of Kerala. But his parents were both college educated and teachers at the local school. So education was a big part of his upbringing. He went on to study mechanical engineering at college and initially worked as an engineer.

7:00But he had a turning point when some of his friends asked him to help them prepare for an entrance exam. And he kind of realized he had a talent for explaining difficult maths problems clearly. And so when he started out tutoring small groups of students, demand grew very quickly. and he began renting out large auditoriums that could seat more than a thousand people and students would actually buy tickets to attend these sessions.

7:27Chris Kay: Using let's say a radius you can convert like circle to something like this when you open the circle first it will become like this then it will become like this and eventually those venues became too small so he moved into sports stadiums and they were these live performances, what he would call maths shows, and they created a huge buzz. In 2015, Ravindran launches an app that eventually offers lessons for all kinds of students. The app basically offered courses for children all the way up from elementary school through to high school. For the younger kids, they had all this stuff with animated lessons, teaching basic science, things like how ecosystems work.

8:09Chris Kay: And we've got some reptiles. Yes, crocodiles, turtles and lizards. Now crocodiles and turtles live in and around water bodies. But the smaller reptiles, like lizards, are very, very sharp, right? Take any habitat. Deserts, forests. And for older students, the focus was still kind of heavily on maths and science and preparing for these major exams and competitive tests. The app worked on a freemium model so you could try some content for free, but full courses required a subscription from maybe$40 or whatever a month to hundreds of dollars. When the pandemic lockdowns hit in 2020, demand for apps to help students with remote learning skyrocket.

8:54And Baiju's is there and ready. Millions of students were using it, especially when schools were closed and parents were looking for online learning tools. You saw their ads everywhere. It was on television, billboards, social media. They were spending an enormous amount on marketing. And one of the most visible moves was becoming the sponsor of India's national cricket team, which is really about as big as a branding platform as you can get in this country. Baiju's becomes a household name in India. But Ravindran has even bigger ambitions. Global ambitions. So around that time, Baiju was looking to buy a string of companies, really trying to build out a global edtech empire.

9:40They went on a huge acquisition spree in a very short space of time. They got up to about 20 companies worldwide. And a key part of this was toward the end of 2021, they took out a$1.2 billion term loan from a group of U.S. lenders. And the idea was to use that to fund some of the acquisitions, particularly in America. Chris, so in 2022, a new round of funding pushes Baiju's valuation to about$22 billion. dollars. How significant of a moment is this, you know, not only for Baiju's, but for companies in India more generally? Oh, it was a massive deal. At the time, the valuation made Baiju's the most valuable startup in India.

10:28You know, it was worth more than many long-established education companies and even some publicly listed tech firms. This was happening during a period when global interest rates were very low and investors were pouring these huge amounts of money, into tech startups and India in general were seeing a wave of unicorns, you know, companies valued at more than$1 billion. But even in that environment, that kind of supercharged environment, Baiju's really stood right at the top. And it was really seen as one of the flagship success stories of India's tech world at the time. At this particular moment in 2022, it looks like Baiju's has it all.

11:07The company has investments from big-time players like BlackRock, the Chan Zuckerberg Initiative, the World Bank. They're expanding rapidly. The soccer star Lionel Messi is even brought on board as a global brand ambassador. Baiju Ravindran himself is becoming a bit of a celebrity in India, going to lots of conferences, talking about the bright future not only for his business, but for all businesses in India.

11:35Chris Kay: We need not 75 ,000 startups. We need a million startups. And think of a million startups, if there are a million startups creating 100 jobs, just 100 jobs. You're talking about 100 million jobs, 100 million. That's how we can make India a superpower. And this is our time. Next 20, 30 years is people are always bullish about Indians. Now people are bullish about India. Raveen Dhan was really sort of in the spotlight at the time. You know, obviously India has a massive young population and intense competition for education. So the idea that his app could deliver that to anyone with a smartphone was very compelling.

12:14He was trying to move Baiju's into becoming this symbol of India's growth and of a particular moment in India's tech boom. But almost as soon as Baiju's star shines brightest, Baiju's delays filing its financial accounts in 2022. And this gets people to start asking questions. And the group with the most questions are the U.S. lenders. They're the ones who had given Baiju's parent company a$1.2 billion loan the year before. In return, they had expected regular financial disclosures. And when those disclosures didn't arrive, they started asking questions. And these discussions with Ravindran and senior management at Baidu's dragged on for months.

13:03And eventually, the lenders accused the company of breaching the terms of a loan. In 2023, the lenders declared the Shell company in default and took the dispute to court in Delaware, where the company was incorporated. And when they then did that, they put in place a restructuring agent who took charge of the company. The lenders then argued or alleged that they had discovered about half a billion dollars of the loan had effectively gone missing. And this wasn't the end of Baiju's new problems. Rising interest rates and the easing of COVID lockdowns really hurt Baiju. The group was over leveraged and eventually they were forced into bankruptcy proceedings in both India and the US, where many of its creditors were based.

13:55After a long delay, Baidu finally reported their 2021 and 2022 financials almost two years later and showed that their losses had reached almost$1 billion. So how did this company go from the top of India's tech sector to bankruptcy and half a billion dollars missing? That's up next.

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14:57So we've talked about Baiju's rise, its speedy decline. And now I want to dig into the weeds of the fallout. When the company filed for bankruptcy, that unleashed a wave of legal cases. These cases have flooded courts in India, the United States, and the United Arab Emirates. And Chris has been piecing much of this together from Mumbai. Ravindran was really this star startup founder who kind of encapsulated this boom time in India's tech sector. The FT had been following him for years and his rise. So it was important for us to also flag about why things had really taken a turn for the worst. And the sprawling lawsuits which were resulting from that between Delaware and Bangalore, where Bajus is based, really exposed the complexity of enforcing legal action and judgments across borders and jurisdictions.

16:06Chris, tell me, what have you learned as you've been reporting on all this and sorting through all these court filings? So the cases are incredibly complex. In the US, they played out across Florida, Delaware, New York. They've produced a series of eye-catching allegations, and it's been very dramatic. To the question of the missing$500 million, what we'd learned was that the creditors and a Delaware judge had basically accused Baidu's and associates of siphoning funds out of the US through a series of convoluted transactions and using a number of unknown or very little known entities. Investigators say that the money essentially moved from the US through the UK to Singapore and eventually returning to India.

17:02And it's taken them years to piece that together. So Ravindran himself has strongly denied any wrongdoing throughout this process. And he says that none of the loan funds from the US creditors were siphoned, hidden or diverted for personal gain. He's also described the US lenders as vulture lenders who, in his view, unnecessarily accelerated the collapse of his company. So in short, creditors and a Delaware judge accuse Ravindran of illegally siphoning off some of that$1.2 billion loan his company got in 2021. Ravindran denies this. But this isn't the only revelation that Chris and our colleagues found out about as this collection of legal cases unfolded around the world.

17:49And that brings us back to William Hayler and his day in court. What you're going to hear next are some recordings from Hayler's testimony in November 2024. What are the risks of you testifying today on your family?

18:07Deep risks in terms of financial, personal stress, family stress. If you take Hayler's testimony at face value, it shows the lengths that Baiju Ravindran was accused of going to to try and get control back of his empire, which had collapsed so quickly. Though we should add that Ravindran's lawyers have disputed Hayler's allegations, and Ravindran denies all wrongdoing. So William Hayler is a businessman from Nebraska who ran a consultancy called Rose Lake, and he told the court that he had been speaking with Ravindran for a relatively regular period since about 2023, which by this time, some of Baiju's companies were starting to go through bankruptcy proceedings.

18:57One of these companies in bankruptcy proceedings, Chris tells me, is another education business called Epic Creations. This is one of those 20 or so acquisitions Baiju's made during its rise. And Heilohat was aware of this company because his wife worked in the U.S. school system and he was very passionate about the product they had developed, which he called a kind of Kindle for students. My wife actually works in the public schools, which is how I originally got to know Epic and sort of, for lack of a better phrase, sort of fell in love with the product and what it can do for students. Epic Creations was subject to a court supervised liquidation of Baidu's assets in Delaware.

19:44And Hayler's contacts put him in touch with Ravindran and suggested that they could help him revive the company and legitimately regain control of it. And so Hayler developed this relationship with Ravindran to do just that. Since July of 2024, have you had any conversations with Baidu Ravindran about Rose like potentially acquiring Epix assets? Yes. Ballpark the number of those conversations. Since July, probably hundreds of conversations, both in person, over multiple meetings, and on the phone almost on a daily basis, if not multiple times a day. Hayler testifies that he flew to Dubai twice in that year, 2024, to meet Ravindran there.

20:28And so, Hayler, he had started to get a little suspicious of Ravindran's motives. And Hayler testified that he observed behavior that he had fought odd. He claimed Ravindran often carried free phones. He isolated people for one-on-one meetings, used personal email accounts. And I think in one sort of kind of, again, eye-catching allegation, Hayler said that Ravindran had opened a chat GPT window in front of him, which revealed the prior search on, quote, how to defend against corporate fraud accusation. And it was kind of, as Hayler described, it's a series of misgivings. There was a demonstration of AI at some point in one of these meetings, correct?

21:13Yes. Baiji was showing me how to use chat GPT. And one of the chat GPT searches was something about corporate fraud, correct? Yeah, this was in the moment where Baiju was, within a 10-minute moment where Baiju was asking me to rent a truck to go to Mexico to take Osmo inventory and bring it to the U.S. so we could sell it. He was showing me how easy that would be. And on ChatGPT, one of the searches that he had was defending against corporate fraud. Hayler's misgivings extended beyond an odd ChatGPT search, though. When Hayler was talking to Baiju's US creditors about potentially buying out the debt so that they could retake control of Epic and some of the other companies, Ravindran, Hayler alleges, organised the movement of about$11 million to his company to demonstrate it was well funded.

22:05But later on, Hayler said he had inspected the source of where that money came from. And it came from a UK supply chain company, which was implicated in some of the other Delaware cases, which was named as a ledge siphoning company for the missing half a billion dollars. And Hayler, as he says, thought he was sitting on potentially misappropriated funds that would be used to help buy Jews' debt and assets at far sale prices. When Hayler realizes this, that he had potentially been sent misappropriated funds, this was when he decided to testify in court. And this is where things became even more surprising.

22:49You understand you were disclosed as a witness for today's hearing? That's correct. Do you know when in the week you were disclosed? I believe Tuesday. So at this point on the witness stand, Heller is describing how Ravindran had allegedly frantically tried to call him after he was disclosed as a witness in the proceedings. Around the time he normally wakes up, I received what felt like four very frantic calls, all within three or four minutes of each other. And we eventually spoke after that fourth missed call. So you spoke conversation number five, is it? Yeah, five or six. You know, he had called at least four times before we spoke.

23:33So tell us about that conversation. He was very concerned seeing my name in the filing. He asked if I was intending to be a witness, whether I was being forced to come here, whether I had, in his words, cut a deal with the lenders, if I was volunteering. whether or not I would issue a declaration. And at that time, suggested that if it made sense, I could go somewhere else. I could come to Dubai until the hearing is over. When Ravindran found out that Halo was about to testify against him in the Delaware court, He allegedly promised him a$500 ,000 job, equity, as well as housing and schooling for his children.

24:24But Hayler decides to decline and testify in front of the court instead. Mr. Hayler, what is the document you see on the screen? Actually, it's a little blurry. Oh, perfect. This is a plane ticket for myself departing yesterday evening from Chicago to Dubai. Who sent you this plane ticket? Bayju did. Mr. Haler, do you see the highlighted total fare? I do. So Haler discloses that Ravindran allegedly sent him this very pricey plane ticket from Chicago to Dubai that would take him out of the country ahead of his court appearance. What is the total fare for this ticket to Dubai? $10 ,698.91. I take it you didn't board a flight to Dubai yesterday?

25:14I did not. Mr. Haler, after everything you've been through, why did you choose to afford a flight yesterday to Philadelphia to come to Delaware and not go to Dubai? Sometimes it's better to do the right thing than the easy thing. Thank you, Mr. Hayler. So, Chris, a lot to unpack here. Alleged witness tampering, these odd anecdotes about searching for corporate fraud. What did we learn in all this? Yeah, I don't think this sort of testimony, these sort of allegations come about in your average corporate bankruptcy proceedings in the US. they're really something if we take what Hayler has said at face value if we believe his allegations in the courtroom then it really shows the length that Ravindran was willing to go to regain control of these companies that he was losing to his US creditors in these court proceedings.

26:20it's important to note though that Ravindran himself wasn't a party to the epic bankruptcy case so Ravindran's lawyers have told us that Hayler's statements are hearsay and his lawyers were not able to cross-examine Hayler on the stand. So what happened after William Hayler gave this testimony in 2024? So immediately after his testimony the bankruptcy judge said he was gravely disturbed quote about the alleged witness tampering. And he actually referred it to the U.S. attorney's office. And again, I think it's important to note that, you know, Ravindran has strongly denied any wrongdoing throughout this process.

27:01And what about beyond this one case that Hayler testified in? What about the other cases you've been tracking? So months after Hayler's testimony, the judge in another case ruled that there had been fraudulent transfer of the more half a billion dollars from the US term loan and the lenders after that moved to directly sue Ravindran. Those proceedings came to a head late last year when the Delaware court ruled in favour of the lenders and issued what's called a default judgment against Ravindran for failing to comply with expedited discovery orders. And the court is now in the process of taking submissions from lawyers on the damages that Rafi Juin should pay, though his lawyers have said they will be appealing the judgment.

27:49And in India, the U.S. creditors have also essentially taken control of Baiju's parent company in forced insolvency proceedings there. And they are trying to recover and sell the last valuable parts of the empire. How has news of Baiju's collapse and then And the subsequent fallout in all these courts been received in India. Yeah, the collapse of Baidu's has been a huge story in India because the company was once seen as a national tech champion. The legal disputes, the missing loan funds and the financial troubles have really captured the public attention here. More widely, corporate governance in India has come under wider scrutiny as well.

28:35Why corporate governance? So the Baiju's case isn't the only Indian corporate blowout in recent times, but it's definitely one of the most spectacular. Some of his critics say that Ravindran's actions have exacerbated his own downfall. And in an interview with the FT back in 2024, he did tell us that many of his strategies and in his legal battle, quote, had not gone right. People I spoke with have also said with hindsight that investors had come in to buy Jews at extremely high valuations and now those investments have been written off. More broadly, the episode has also become a cautionary tale about the risks of pouring huge amounts of venture capital into fast growing startups without enough scrutiny.

29:23How would you describe what India's tech startup scene has been like since everything's happened with buy Jews? David Funding across India's startup ecosystem has become noticeably tighter, and it's down by more than 70 % since 2021. Obviously, part of that is global. Look, interest rates are high now. Investors everywhere are being more cautious with money. But the collapse of Baidu's, obviously a high profile company, particularly in India, has made people more careful here. This saga is still unfolding and probably dragging on in the minds of some people. The headlines continue to come up in India's press and privately many founders in the startup scene, particularly in edtech, have kind of tried to distance themselves from what happened and particularly when they're talking to investors.

30:15So while India's startup beaker system is still very active, the mood today is much more cautious than it was during that boom period we described earlier. And what's happening with Raveen during now. Ravindran has really been fighting this for the last few years. He himself has said publicly last year he wants to make a comeback. He said this as much in a statement to us for this story. So, you know, he does not think this is over yet. Whether investors or other backers would agree with him is yet to be seen.

30:57Thank you for listening to Behind the Money. In our show notes, I've listed some ways you can stay in touch with me online. Feel free to drop me a note. Also, I want to add that you shouldn't unsubscribe from this feed just yet. A new show from the FT will be starting here in a few weeks. This episode was hosted and produced by me, Michela Tendera. Fact-checking by Simon Greaves Sound design and mixing by Kelly Gary Original music is by Hannes Brown Topher Forges is our executive producer Cheryl Brumley is the FT's global head of audio

32:04Chris Kay: Transcription by CastingWords goals, investing style, life stage, or experience, Schwab has everything you need all in one place. So you can invest your way. Visit schwab.com to learn more. Maybe you remember this moment last year. April 2nd, 2025 will forever be remembered as the day American industry was reborn. U.S. President Donald Trump introduced sweeping tariffs on the rest of the world. And all this week, the FT News Briefing will look at how Liberation Day has changed the global economy a year on. Beneath all the noise and the turmoil, essentially America's changed very fundamentally.

32:42Chris Kay: I think he has tried to remake the world trading system. He has failed. To hear our series on the consequences of Liberation Day, follow the FT News Briefing wherever you get your podcasts.