Byju’s, the leading edtech startup and once India’s most valuable, has launched a rights issue aiming to raise $200 million as it grapples with a severe funding crunch.
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According to a Techcrunch report, the company has significantly reduced its valuation asks by 99 per cent, seeking essential capital to address liabilities and operational costs.
If successful, the post-money valuation is expected to be in the range of $220 million to $225 million, marking a substantial drop from its $22 billion valuation in 2022.
Byju Raveendran, the founder of Byju’s, communicated to shareholders in a letter the urgency of the rights issue, emphasising personal investments of $1.1 billion by the founders in the last 18 months.
As per the Techcrunch report, Raveendran highlighted the sacrifices made for the company, stating, “We have spent our lives building this company and are fervent believers in its mission.”
The rights issue provides existing investors with an opportunity to participate, but failure to do so would result in a loss of their entire equity position in the startup.
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The move comes as Byju’s faces a challenging financial landscape, having spent $2.5 billion on acquisitions in 2021 and 2022. The startup has raised over $5 billion in equity and debt from notable backers such as General Atlantic, Silver Lake, Lightspeed, and others.
Byju’s anticipates the rights issue to conclude within 30 days and views it as imperative for creating a glidepath to deliver strong shareholder value.
Byju’s, aiming to go public in early 2022 through a SPAC deal, had to put its IPO plans on hold due to market uncertainties caused by Russia’s invasion of Ukraine.
The startup faced challenges in raising capital, with the auditor Deloitte resigning, and three key board members quitting.
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The rights issue allows Byju’s to part ways with dissenting investors, as those who do not participate stand to lose their entire equity position in the startup.
