The rights issue values the company at $220-250 million, down 99% from the previous $22 billion valuation
Struggling edtech startup Byju’s has initiated a rights issue to secure $200 million from its current investors, aiming for a valuation of $225-230 million. This represents a significant decline of 99% from its peak valuation of $22 billion in October 2022. The company is grappling with a funding shortage and intends to utilise the raised funds to address immediate liabilities and fulfil operational needs, according to a company statement.
The subscription period for the rights issue will extend for 30 days. Byju Raveendran, the founder and CEO, conveyed to the shareholders through a letter about the board’s resolution to raise capital using the rights issue mechanism.
Over the past 18 months, the founders of Byju’s, holding the largest shares, have injected over $1.1 billion into the company. In a communication to shareholders, the founders acknowledged the difficulties encountered by the company in recent months while expressing unwavering confidence in Byju’s mission.
In a note which was written to the shareholders of the company by Byju’s, it said, “It has been 21 months since our last external capital raise, during which we have cut our burn and worked to become a lean organisation, 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.”
“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,” he further added in the note.
The rights issue arises amid a challenging financial situation for the edtech firm, marked by a severe cash shortage. Legal actions by lenders and vendors have led to Byju’s being taken to the National Company Law Tribunal under the Insolvency and Bankruptcy Code.
In a letter addressed to shareholders, Raveendran drew parallels between the company’s current challenges and the hardships depicted in the verses of “Invictus” by William Ernest Henley, “In the fell clutch of circumstance I have not winced nor cried aloud. Under the bludgeonings of chance, My head is bloody, but unbowed,” he wrote.
