Byju's Plans $200 Million through Rights Issue at Sub-$250 Million Valuation

Struggling edtech startup Byju's has initiated a rights issue, aiming to secure $200 million from current investors at a valuation of approximately $225 million-$230 million. This represents a significant decline of 99 percent from its peak valuation of $22 billion. The company, facing a funding crunch, stated that the raised funds will be utilized to address immediate liabilities and fulfill operational needs.

“It has been 21 months since our last external capital raise, during which we have cut our burn and worked to become a lean organization, razor-focused on execution. This capital raise is essential to prevent any further value impairment and to equip the company with necessary resources to deliver on its mission", founder Byju Raveendran said in a note to shareholders. Raveendran claimed that the founders have infused over $1.1 billion into the company over the past 18 months. “In these uncertain times, we have not shied away from taking several tough decisions in the best interest of the company, and we will continue to do so in the coming months", Raveendran said.

The startup, originally based in Bengaluru, was previously sought after by investors who collectively injected over $5 billion into the company. However, it is currently facing insolvency proceedings initiated by foreign lenders due to its inability to repay a $1.2 billion term loan obtained in 2021. In recent months, the company has witnessed the departure of numerous senior-level employees, experienced multiple valuation markdowns from investors, and become entangled in legal disputes. In belated filings last week, the startup disclosed consolidated losses exceeding Rs 8,000 crore for the fiscal year 2022.

Raveendran mentioned that Byju's is on the verge of attaining operational profitability, with less than a quarter remaining. The fiscal year 2023 results are pending filing. Since October 2022, the company has implemented workforce reductions, affecting over 5,000 employees, as part of a cost-cutting strategy. Additionally, Byju's is actively exploring the sale of certain assets to fulfill the repayment obligations of its term loan.