Byju’s, the most valuable edtech startup in the world, changed the amount of money it wants to raise through a rights issue on Monday. The Indian company needs the money to pay its bills. The startup wants to raise $200 million through a rights issue. It says this money is “essential to prevent any further value impairment.”
A person familiar with the situation said that the startup is lowering its value to “next to nothing” in the rights issue, and all of its current investors can take part. According to the source, who asked to remain anonymous because they were sharing private information, if Byju’s is able to raise $200 million, the company will be worth between $220 million and $250 million after the money is raised. This is a 99% drop from its value of $22 billion in 2022.
In a letter sent to shareholders on Monday, Byju’s founder Byju Raveendran said that he and other founders of the edtech group have spent $1.1 billion into the Bengaluru-based startup over the last 18 months and want the investors to keep putting money into the company. “For the sake of the company, we have given up a lot for it.” This company is something we’ve worked on our whole lives, and we really believe in its goal,” Raveendran wrote in the letter that TechCrunch saw.
Byju’s is trying to get money because it is severely short on funds, and the rights problem comes at a bad time. The startup bought more than a dozen companies for $2.5 billion in 2021 and 2022. It has since raised more than $5 billion in debt and stock from investors such as Peak XV, Lightspeed, the Chan Zuckerberg Initiative, BlackRock, UBS, Prosus Ventures, and B Capital. In a statement, Byju’s said that the rights problem should end in 30 days.
“It’s been 21 months since our last outside capital raise. In that time, we’ve cut our costs and worked to become a lean organization that is laser-focused on getting things done.” “The board thinks it is important for the company to raise capital so that it can set itself up to deliver strong shareholder value,” Raveendran wrote in the letter.
For almost a year, Byju’s has been looking for new money. The company was almost done with talks to raise about $1 billion last year, but the talks fell through when Deloitte, the company’s auditor, and three important board members quit. Instead, Byju’s only got less than $150 million from Davidson Kempner in that round, and they had to return the investor the full amount they promised because they technically defaulted on a separate $1.2 billion term loan B.
Following BlackRock’s announcement earlier this month that it was lowering the value of its holding in Byju’s, the Indian company was thought to be worth only about $1 billion. This led to the new funding discussion.
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Byju’s was getting ready to go public in early 2022 through a SPAC deal that could have made the company worth as much as $40 billion. A person familiar with the situation says that Byju’s had to delay its IPO plans because of Russia’s invasion of Ukraine in February, which went down in the stock market. As things got worse in the market, so did Byju’s business prospects.
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