Byju’s seeks new funding at less than $2 billion valuation, a 90% drop
Byju’s, once valued at $22 billion, is willing to cut its valuation to below $2 billion as it hunts for new funding, a person familiar with the matter told TechCrunch.
The Bengaluru-headquartered startup, once India’s most valuable, is looking to raise $100 million to $300 million in new funding via a rights issue and the edtech group’s chief executive and co-founder Byju Raveendran has agreed to step down from the top role in the interest of improved governance after the new funding, according to two people familiar with the matter.
Byju’s willingness to cut the valuation is a stunning reversal of fortune for the startup, once the poster child of the Indian startup ecosystem. The startup, which spent more than $2.5 billion in 2021 and 2022 acquiring over half a dozen firms globally, was once showered a valuation as high as $50 billion by marquee investment bankers, TechCrunch earlier reported.
A Byju’s spokesperson declined to comment.
Byju’s has been chasing for new funding for nearly a year. The startup was close to raising about $1 billion last year, but the talks derailed after the auditor Deloitte and three key board members quit the startup. Instead, Byju’s ended up raising less than $150 million in that round from Davidson Kempner and had to payback the investor the full amount after making a technical default in a separate $1.2B TLB loan.
The new funding deliberation follows BlackRock cutting the value of its holding in Byju’s, slashing the implied valuation of the Indian startup to about $1 billion, according to disclosures made by the asset manager.
Byju’s was preparing to go public in early 2022 through a SPAC deal that would have valued the company at up to $40 billion. However, Russia’s invasion of Ukraine in February sent markets downward, forcing Byju’s to put its IPO plans on hold, according to a source familiar with the matter. As market conditions worsened, so too did the business outlook for Byju’s. The company began facing mounting pressure from investors to address issues that it had previously left unresolved.
The startup has been backed by over a dozen movers and shakers in the industry, from Peak XV Partners to Lightspeed, UBS and Chan Zuckerberg Initiative. Byju’s, which gained initial popularity in India because its tutors used intuitive ways — tackling complex concepts using real-life objects such as pizza and cake — has raised over $5 billion in equity and debt in the past decade.
Byju’s financials for the year ending March 2022. The startup has yet to file the financials for the year ending in March 2023.
Byju’s today is reeling from a series of challenges: It’s struggling to raise capital, make payroll and pay off its billion-plus debt. It missed its revenue target for the financial year ending in March 2022, the startup disclosed in a much-delayed account last month. Its CFO Ajay Goel left the startup in less than seven months to return to Vedanta in late October. Prosus publicly slammed the Bengaluru-headquartered startup in July for not evolving sufficiently and disregarding the investor’s advice and recommendations despite repeated attempts.
