Edtech major is reportedly engaged in discussions with prospective investors for a $1 billion fundraising round, as it strives to protect Founder and CEO Byju Raveendran’s authority over the company amid shareholder tensions.
According to a Bloomberg report, BYJU’S is offering incentives such as preferential treatment in the event of liquidation to win over new investors. The edtech firm intends to close the round within a two-week timeframe, the report added.
YourStory could not independently verify the report and has reached out to BYJU’S for a comment.
Last month, BYJU’S secured $250 million in fresh funding through structured instruments, maintaining a valuation of $22 billion. Additionally, the company was reportedly in the process of finalising a capital raise of about $700 million from a sovereign fund at the same valuation.
However, following the departure of Deloitte as its auditor and three key board members officially stepping down from its board, the challenges have increased for the Bangalore-based company.
The edtech firm has faced pressure from a group of investors to limit the privileges granted to Raveendran under a shareholders’ agreement, the Bloomberg report said, adding that some of these investors have considered alternative strategies, including equity deals to merge specific elements of BYJU’S with its competitors.
Following a call with shareholders on Saturday, Raveendran and Chief Financial Officer Ajay Goel provided reassurance to the opposing shareholders, the report noted.
During the call, Goel stated that the company is targeting a September deadline to close its FY22 audit and conclude the FY23 audit by December. The company is also considering appointing independent directors to its board.
Last Friday, Peak XV Partners’ GV Ravishankar, Prosus’s Russell Dreisenstock, and Chan Zuckerberg Initiative’s Vivian Wu—three key board members of BYJU’S—officially resigned from the board of the edtech firm.
BYJU’S initially refuted reports about their resignations. However, it later acknowledged that “a few investors had to vacate the board seat”.
According to Bloomberg, Raveendran plans to restructure the board once the fundraising round is completed, considering that the new investors will likely occupy some of the currently vacant board seats.
The edtech unicorn has been plagued with mounting losses, layoffs, and pending loans after the end of the pandemic-led edtech boom. It is resolving conflicts with creditors regarding a $1.2-billion term loan B (TLB). Last week, it initiated another round of job cuts that will impact more than 1,000 people.
