After months of private scuffles, Byju’s and some of its largest investors are now taking their fight public.
Byju’s, once India’s most valuable startup, said Friday its investors do not have the voting right to seek leadership changes, a day after a group of shareholders called for an extraordinary general meeting to remove founder Byju Raveendran and his family from the top roles at the edtech group.
In a press release, Byju’s said it will continue its deliberation to raise $200 million in a rights issue, for which it has received “encouraging responses from multiple investors.”
Investors including Prosus, General Atlantic, Peak XV, Chan Zuckerberg Initiative said in a statement Thursday that they seek a resolution of the “outstanding governance, financial mismanagement and compliance issues; the reconstitution of the Board of Directors, so that it is no longer controlled by the founders of T&L; and a change in leadership of the Company.”
That was the third time the investors had sought an EGM meeting. The new request follows Byju’s launching a rights issue to raise $200 million, a capital it said was essential for its survival. The Bengaluru-headquartered startup, once valued at $22 billion and which has raised over $5 billion, reset its valuation to $25 million in the rights issue, TechCrunch previously reported.
Full Friday statement of Byju’s:
Think & Learn Private Limited, the parent of BYJU’S, has noted with sorrow, statements from a select few investors calling for an extraordinary general meeting (EGM) to replace founder and group CEO Byju Raveendran. Under these unfortunate circumstances, we would emphasise that the shareholder’s agreement does not give them the right to vote on CEO or management change.
TLPL will continue with the proposed $200 million rights issue after receiving encouraging responses from multiple investors. The company is gladened by the support received by a wide section of its shareholders
The criticality of the rights issue has been shared with all shareholders, with capital being pivotal for a successful turnaround. Unfortunately, the company and our employees are paying the price for a stand-off triggered by some investors. Business continuity is essential, and we shall prioritise this in our actions.
Byju Raveendran and his leadership team have kept TLPL afloat after three investors left the company’s board last year, triggering a broader crisis. The company, along with the advisory board consisting of Rajneesh Kumar and Mohandas Pai, constituted a working group with the investors to find a constructive way forward.
The company and its leadership have updated the working group on all crucial matters, including ongoing business restructuring, financial position and audits. TLPL has been turning around the business, cutting the monthly burn to near operational breakeven and working on an AI-led technological refresh soon. In context, the actions of some unnamed investors are disruptive at a highly challenging time.
TLPL will remain on the path of dialogue even as the founders and the leadership find ways to meet the company’s mounting obligations, including salary payouts. We want to re-emphasise that the company has not had any external investor funding for nearly two years apart from the founder infusing over $1 billion — a reason why it launched a rights issue as a quick and equitable way to raise money.
More to follow.