- The Runway Ventures
- Posts
- 🇮🇳 The biggest edtech startup "scam" in 2022
🇮🇳 The biggest edtech startup "scam" in 2022
How Lido Learning went bust after raising $23.5 million, 1,200 employees laid off, investors lost money, and customers felt cheated.
Admond Lee
July 07, 2024
Hey Founders,
Welcome to The Runway Ventures — a weekly newsletter where I deep dive into failed startup stories to help you become the top 1% founder by learning from their mistakes with actionable insights.
Today’s issue is about an edtech startup “scam” in India. Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → Lido Learning
⚠️ 2 Mistakes → Poor customer service
🧠 3 Lessons Learned → Sustainable growth > Aggressive expansion
🔗 The Runway Insights → How to know if you’ve product-market fit
💰 Southeast Asia Funding Radar → Heymax.ai raises $2.6M to help you earn a free vacation with your card spending
☠️ 1 Failed Startup: Lido Learning
🚀 The Rise of Lido Learning
Lido Learning was an ambitious edtech startup in India founded by Sahil Sheth in April 2019. The company aimed to revolutionise the way students from Kindergarten to Grade 12 learned by offering live online classes.
🧑🏻🏫 Oh and Sahil wasn’t your ordinary founder. He previously founded Infinite Student, which was acquired by Byju in 2015, where he served as Vice President before venturing out to start Lido Learning after identifying a “gap”.
🇮🇳 It was the gap that made Sahil quit his job to build Lido Learning to disrupt the traditional small group tuition class market.
The Problem — While kids liked watching self-paced videos, they preferred the real-time interaction and exchange of ideas with friends and classmates which can only happen during small group, face-to-face, live tuition classes.
The Solution — Lido Learning provided interactive, small-group online tutoring sessions with a more engaging and personalised earning experience, including:
Maximum teacher-student ratio was kept at 1:6
Modern technology and analytics to track performance
Covered a wide range of subjects (i.e. Math, Science, English, Coding)
Self-paced videos, quizzes, games, customised tests, and homework assistance
 | 📈 Sahil found the right gap. Problems were real, and Lido Learning quickly gained traction after launch, especially in Tier 1 cities. |
💰 Money, money, money
By November 2019, the company had 138 employees and had raised $3 million in its Series A funding round. 6 months later, it boasted over 2,000 paying customers and nearly 400 teachers.
The company continued to grow rapidly, raising $10.5 million in its Series B round in March 2020 and another $10 million in its Series C round in 2021, led by prominent investors like Indian entrepreneur Ronnie Screwvala’s Unilazer Ventures.
🎈 The balloon was getting bigger
At its peak, Lido Learning had ambitious plans to expand internationally, targeting markets in the UK, Australia, New Zealand, and Southeast Asia.
The company was on a high, with a strong product and a growing customer base. For the company to expand rapidly, it raised more money, and the balloon was getting bigger and bigger.
📉 The Fall of Lido Learning
🎈💥 It was high time, until it wasn’t. The balloon became too big and before Sahil knew it, it burst.
It turned out that the rapid expansion and aggressive growth strategy set the “stage” for its eventual downfall. Lido Learning was overly reliant on continuous funding to sustain its operations and expansion plans, leading to its collapse.
📌 Here’s what happened to Lido Learning:
Apr 2019 — Sahil founded Lido Learning.
Nov 2019 — Raised $3 million (Series A) and hired 138 employees.
2020 — Raised $10.5 million (Series B).
Had over 2,000 paying customers with 400 teachers.
💰 Revenue → $500K
💸 Burn → $5.7 million
🥵 Loss → $5.2 million
2021 — Raised $10 million (Series C) to expand internationally.
💰 Revenue → $1.5 million
💸 Burn → $7.7 million
🥵 Loss → $6.2 million
Jan 2022 — Laid off 1,200 employees due to financial strain 😣
Lido Learning wanted to raise more from 2 major funding deals — ByteDance ($100 million) and Cure.fit ($10 million — but failed.
Feb 2022 — Sahil told employees in a virtual meeting that Lido Learning would cease operations as the company ran out of cash ☠️
The company failed to pay off its debts to its ex-employees, customers, vendors, lenders, and sundry creditors.
And just like that, the balloon burst, and Lido Learning shut down.
I feel foolish. I feel embarrassed. How did I make this mistake?
While it may seem that Lido Learning failed because it ran out of money, there were deeper problems the company was facing internally due to some deadly mistakes👇🏻
Want to learn more about Lido Learning’s downfall?
⚠️ 2 Mistakes
Mistake 1: Poor customer service
It's my hard-earned money. Not even in my worst nightmare did I expect to end up in this situation.
If Amazon is the epitome of customer obsession, Lido would be the exact opposite.
Many customers (parents) tweeted on Lido’s timeline asking for a refund and complaining about Lido’s poor customer service.
Customers were offered a 15-day free trial to use Lido Learning platform. They could ask for a refund if they didn’t like the classes. However, when they asked for a refund, Lido’s customer support didn’t even respond to such queries.
🤦🏻♂️ No replies. No refunds. No customer service.
💔 Hard-earned money gone. Trust gone. Unhappy customers.
Just when you thought Lido Learning would fix these problems, nope it didn’t. Instead, the company raised more money to expand across India and internationally. They even opened up coding classes in the US and Canada, when their troubles at home remained unsolved.
Mistake 2: Go big or go home
🌏 Probably the biggest killer of Lido Learning was its “go big or go home” strategy.
Well… Growing at all costs might work during the COVID-19 pandemic when almost all edtech startups enjoyed a bull run with easy money raised from investors. However, this “go big or go home” strategy no longer worked during the post-pandemic period.
Even worse, instead of fixing its internal problems (poor customer service, bad hiring decisions, high burn), Lido Learning raised more money and spent it all on expanding to international markets — which failed terribly.
In short, Lido Learning's downfall was a combination of financial mismanagement, over-reliance on external funding, and internal issues.
🧠 3 Lessons Learned
Lesson 1: Prioritise customer experience
Happy customers are the backbone of any successful business. Period.
💟 Always ensure top-notch customer service, make your customers feel valued and heard, respond to queries promptly, and fulfil promises like refunds to build trust and loyalty.
Honestly, your customers don’t really care how much money you’ve raised. They want their problems to be solved. And if you can’t solve their problems, you’ll eventually run out of business.
🌟 Key Takeaways:
😍 Create a robust customer support system
Nowadays, customers want support wherever and whenever they want, so make it easy for them to seek support.
For example, you can use tools like Zendesk to manage and streamline customer support queries across different platforms.
Or you can also hire an offshore team to have 24/7 support without breaking the bank.
🙏🏻 Be proactive and transparent in communication
If shit happens, reach out to customers proactively with updates, potential issues, solutions, and timeline to solve the problems.
Don’t wait for customers to come to you with problems. By the time they reach out to you, it’s too late as the customer experience is affected.
Lesson 2: Sustainable growth > Aggressive expansion
Rapid expansion can be tempting, but it’s crucial to grow sustainably.
Focus on resolving internal issues and strengthening your core operations before taking giant leaps into new markets.
🏰 Fortify your kingdom first before conquering other territories. Because for startups, you’ll more likely die of suicide than murder.
🌟 Key Takeaways:
💪🏻 Focus on your core competencies
Know your competitive advantage as a company and double down on that.
Avoid diversifying too quickly into unfamiliar markets or product lines.
Go deep first before going broad.
🌏 Understand your market
This is very true for Southeast Asian countries as each market has its own unique challenges, preferences, and ways of doing business.
Before you expand to other markets, make sure to conduct market research to understand your customers’s needs and the competitive landscape.
Don’t just expand for the sake of expanding and branding. Chances are you’ll kill yourself.
Lesson 3: Cash flow is king
🤑 Revenue is vanity, profit is sanity, but cash is king.
Keep a close eye on your cash flow. Regularly review cash flow statements to understand where money is coming from and where it’s going.
The last thing you want is that you don’t know where you spent your money and wonder why you’re losing money month after month.
🌟 Key Takeaways:
🧑🏻💻 Use Financial Management Software
Invest in robust financial management software to automate and streamline cash flow tracking.
For example, you can utilise tools like Xero or QuickBooks to automate invoicing, expense tracking, and generate cash flow reports.
I’ve personally used Xero before and found it quite useful and easy to use.
🔗 The Runway Insights
How to know if you’ve product-market fit (Link)
5 proven go-to-market frameworks you need to know (Link)
How to build successful and lasting teams (Link)
How startup founders split equity (Link)
Dovetail: 15 ideas you can borrow from their $1B journey (Link)
How to become a master negotiator using these 7 negotiation techniques (Link)
💰 Southeast Asia Funding Radar
Heymax.ai raises $2.6M to help you earn a free vacation with your card spending (Link)
k-ID raises $45M Series A to keep kids safe while gaming (Link)
Xurya Indonesia raises $55M for businesses to access solar power without the upfront cost (Link)
Samsara Eco bags $65M to set up recycling facilities across SEA (Link)
Cooby, the Taiwan’s WhatsApp conversational sales platform, closes $1.75M to supercharge product development and European expansion (Link)
💃 Rate Today’s Edition
What'd you think of today's edition?Your feedback helps me create better content for you! |
🌟 Top Review of the Week
That’s all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
🤝🏻 Join our founders community on Discord:
Building a startup is one of the toughest things you can do. Why struggle alone when you have our community to help and support you.
This is the founders community I wished I had when I first started.
Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.
Reply