BYJU’S Accuses Investors Of Conspiring In Crisis, Says Received 100% Commitment For Rights Issue

A day after major investors of BYJU’S called for a leadership change, the embattled edtech giant hit out at its investors and accused them of conspiring amid a crisis.

In a note shared with its employees, BYJU’S said that certain investors conspired against founder and group CEO Byju Raveendran to oust him amid the ongoing crisis at the company.

“We are pained to see this action from a few of the investors who should have supported us in our fight at these challenging times, instead of directly speaking to the media. The founders are the largest investors and the greatest fighters for BYJU’S,” the company said. 

BYJU’S claimed that its founders invested over $1 Bn in the startup amid harsh macroeconomic conditions when the investors hesitated to extend support to the company. 

Currently, other than Raveendran, the company’ board comprises his family members Divya Gokulnath and Riju Raveendran. Last year, three of BYJU’S board members – Russell Dreisenstock of Prosus, Vivian Wu of Chan Zuckerberg Initiative, and GV Ravishankar of Peak XV Partners – resigned. 

On Thursday, some major investors of the edtech company called for an extraordinary general meeting (EGM) to reconstitute its board and change its leadership.

Meanwhile, BYJU’S said in the note that its $200 Mn rights issue has received commitments for more than 100% of the amount and it expects to close the fundraise in another 25 days.

BYJU’S said the rights issue will ensure that the company has “enough growth capital” and will help it meet all operational liabilities. “This will mark the beginning of the final phase of our recovery.”

It is pertinent to note that BYJU’S is looking to raise funding from its existing investors at a post-money valuation of $225 Mn, a whopping 99% decline from its last valuation of $22 Bn.

In the note, BYJU’S also said there was a delay in disbursement of salaries to employees this month, which it attributed to the “artificially induced crisis by these select investors”.

However, it said the salaries would be paid in a phased manner and the entire process would be completed by Monday (February 5).

The company also claimed that it is a quarter away from achieving operational profitability.  

Last month, BYJU’S filed its financial statements for FY22 nearly 22 months after the end of the year. Its consolidated net loss zoomed 81% to INR 8,245.2 Cr in FY22 from INR 4,564.3 Cr in FY21. Operating revenue rose over 120% year-on-year to INR 5,014.6 Cr in FY22. 

The startup’s auditor also flagged concerns regarding its continuing net losses from operations and accumulated losses and the outcome of the litigation of the $1.2 Bn Term Loan B availed by Byju’s Alpha Inc.

The startup has been facing a severe cash crunch for over a year now. Besides, it has been fighting on multiple other fronts. Earlier today, Inc42 reported that IT services company Surfer Technology Private Limited has filed an insolvency plea against BYJU’S at the National Company Law Tribunal (NCLT). 

Meanwhile, BYJU’S Alpha, the US subsidiary of the beleaguered startup, has filed for Chapter 11 bankruptcy proceedings in the court of Delaware.