Bengaluru, India - In late April, the Enforcement Directorate officials carried out a raid on Byju's offices in Bengaluru, seizing laptops and publicly associating the world's most valuable education-technology startup with potential foreign exchange violations.

While this was unfolding, Byju Raveendran, the founder and CEO of the company, was in Dubai, seeking solace in his condo. The stress of the situation led him to consume cups of black coffee and answer calls from top investors.

The company had plans for a significant $1 billion equity fundraise from Middle Eastern investors, but the uncertainty surrounding the situation left Raveendran emotionally overwhelmed, leading him to break down in tears during his attempts to defend the company, as recounted by those who participated in the calls.

The troubles faced by Byju's were not limited to the raid; they had been in crisis mode for months. Failure to file financial accounts on time and accusations of hiding significant funds brought additional challenges. Even one of their earliest investors, Prosus NV, decided to give up its board seat due to concerns over governance and disregard for directors' advice.

Both Byju's and Raveendran have denied any wrongdoing, but the situation reflects the broader challenges faced by India's start-ups. Limited domestic venture capital has pushed companies like Byju's to seek support overseas. However, the tightening of funding and increased scrutiny over corporate governance have raised concerns about India's ability to maintain its position as a tech capital of the world.

Investors and experts worry that the ongoing situation at Byju's could impact India's image as an attractive investment destination for overseas funds. The rapid rise of Byju's from a private tutor to a $22 billion company captivated global investors, but concerns about finances and governance have since affected their reputation.

Critics point to decisions made by Raveendran, such as delaying the hiring of a chief financial officer and rapid acquisitions, as factors that contributed to the company's current predicament. Supporters, on the other hand, attribute some of the missteps to the enthusiasm and inexperience of a founder who scaled the business too quickly.

As the story of Byju's unfolds, it serves as a high-profile example of the challenges that can arise when a company grows rapidly in a booming economy without adequate planning for potential downturns. While Raveendran and a spokesperson for Byju's declined to comment, the company's tale sheds light on the intricacies and pitfalls faced by India's burgeoning start-up ecosystem.