Byju's approves rights issue to raise $200 million from existing investors
Byju's has reduced the monthly burn rate of its core business to Rs 50 crore and aims to achieve operational break-even in the next 2-3 months
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The board of Think and Learn Pvt Ltd, the parent company of Byju's, has approved a rights issue to raise $200 million from existing investors, starting on January 29 and remaining valid for the next 30 days, according to a report by Moneycontrol.
The issue will happen at a post-money valuation of $225 million, which is 99 percent lower than the company's last funding round which happened at a valuation of $22 billion, as per the report. This would also mean Byju's pre-money valuation now would be $25 million, which is 99.9 percent lower than the previous funding round.
The company expects most existing investors, including founder Byju Raveendran, to participate in the round. The subscription price has been kept at minimum so that all existing investors can participate and benefit.
This comes at a time when the edtech company is battling with a severe cash crunch. Even as founder and CEO Byju Raveendran has reportedly mortgaged his houses to pay salaries to thousands of employees, lenders and vendors have dragged the embattled edtech company to court under insolvency rules, in a bid to force payment of dues.
In a letter sent to the shareholders on January 29, Raveendran informed them about the board's decision to raise capital through the rights issue mechanism.
Byju's has reduced the monthly burn rate of its core business to Rs 50 crore and aims to achieve operational break-even in the next 2-3 months. Additionally, the company plans to reconstitute the Board after completing the FY23 audit.
The founder went on to draw parallels between the battles the company is going through to the struggles depicted in the verses of 'Invictus' by William Ernest Henley: "In the fell clutch of circumstance I have not winced nor cried aloud. Under the bludgeonings of chance, My head is bloody, but unbowed."
"We believe an expeditious capital raise will provide the company with the resources it needs to rebuild and scale. This shall be used for the continuation of business operations, to manage obligations and to make the company more sustainable," Raveendran said in the letter.
