Amid Mounting Troubles, BYJU’S Seeks $1 Bn To Fight Off Investor Pressure

Embattled edtech major BYJU’S is reportedly in advanced talks with new investors for a $1 Bn fundraising round.

BYJU’S is seeking to fight investor pressure with the fundraise as some of them are looking at curbing founder and CEO Byju Raveendran’s control over the troubled edtech decacorn, Bloomberg reported.

To woo new investors, BYJU’S is offering incentives such as preferential treatment in case of liquidation. On the other hand, none of the existing shareholders of the edtech startup have a so-called liquidation preference.

The edtech giant is looking at closing a round within two weeks, as per the report.

Raveendran is facing pressure from a few investors to give up some of his privileges, given through a shareholders’ agreement, including a right of first refusal on investors seeking to sell their stake.

Some of its investors were also mulling merging some pieces of BYJU’s into competitors in equity deals, as per the report.

It is pertinent to note that reports earlier this year said that Unacademy was exploring a possible merger with BYJU’S-owned Aakash. However, BYJU’S rejected the report.

As per the latest report, Raveendran still has the backing of some of BYJU’s existing shareholders. A call, hosted by Raveendran and BYJU’S Chief Financial Officer Ajay Goel over the weekend, temporarily pacified investors as the edtech startup said its fundraising efforts were on track and that its long-delayed financial statements would be finalised soon.

However, it remains to be seen if BYJU’S can succeed in raising funds amid multiple crises.

Last week, three key board members of BYJU’S – GV Ravishankar, MD of early-backer Peak XV Partners (formerly Sequoia Capital India), Russell Dreisenstock of Prosus and Chan Zuckerberg’s Vivian Wu – resigned.

Adding to the troubles, BYJU’S statutory auditor Deloitte Haskins & Sells also resigned with immediate effect citing the delay in filing financial statements. Following this, BYJU’S announced the appointment of BDO (MSKA & Associates) as its statutory auditor.

In its recent call with investors, BYJU’S assured its investors that it would file its financial statements for the year ended March 31, 2022 (FY22) by September. Further, it plans to file the statements for the year ended March 31, 2023 (FY23) by December this year.

Amid these troubles, the edtech giant is also conducting layoffs. It has also sued its creditor in the US in relation to its $1.2 Bn term loan. Recently, the Enforcement Directorate also conducted search and seizure operations at premises linked to the edtech company.