Byju’s, the world's leading edtech startup, has initiated a rights issue to raise $200 million as it grapples with working capital challenges. This move is aimed at addressing the financial constraints faced by the Indian educational technology firm.
In the rights issue, Byju’s is resetting its valuation to a significantly lower level, providing an opportunity for all existing investors to participate. According to sources familiar with the matter, if the fundraising is successful, the startup's valuation will be in the range of $220 million to $250 million. This marks a substantial 99% drop from the $22 billion valuation it previously commanded.
In a letter addressed to shareholders, Byju’s founder, Byju Raveendran, highlighted the founders' commitment to the company's growth. He disclosed that the edtech group's founders have invested $1.1 billion into the Bengaluru-based startup over the past 18 months and emphasized the need for continued support from investors.
"We have made immense personal sacrifices for the sake of the company. We have spent our lives building this company and are fervent believers in its mission," Raveendran wrote in the letter, which was obtained by TechCrunch.
This rights issue comes at a critical juncture for Byju’s as it seeks to secure additional capital amid a severe funding shortage. The startup, known for its ambitious acquisitions, spent $2.5 billion acquiring more than a dozen firms in 2021 and 2022, propelling its valuation to $22 billion in early 2022.
However, as the company navigates its financial challenges, it has opted for a strategic reset to ensure its continued growth and mission to transform education in India.