Byju's to raise up to $130 million to finance its operations; Prosus cuts valuation to under $3 billion

Think & Learn, the parent company of Byju’s is reportedly in talks with existing investors to raise $120-130 million to finance its operations over the coming months.

According to The Arc report, The funding would help the company make pending vendor payments and cover operational expenses. 

The edtech giant, which expanded rapidly during the COVID-19 pandemic, is now facing a liquidity crisis. It has already taken measures such as mass layoffs and scaling back on loss-making subsidiaries like WhiteHat Jr, reducing its monthly operating burn rate to $5-7 million, the report said.

What do investors want?

The trouble for Byju's doesn't stop here. Prosus, a major shareholder in Byju’s, has marked down the value of its stakes, thereby reducing the edtech giant's valuation to under $3 billion, a significant drop from the $22 billion valuation in 2022.

According to an ET report, Before injecting additional funds, Existing investors of Byju's are setting conditions, including the requirement for audited FY23 results and a reduction in day-to-day control by founder Byju Raveendran.

Byju Raveendran to inject his own fortune?

The report added that Byju Raveendran, who co-founded Byju's along with his wife Divya Gokulnath, is considering using his personal fortune to support the company's operations in these tough times.

The reports come after Byju's announced changes in leadership positions, with new appointments for key roles like the CFO and CEO of Byju’s India.  Earlier this week, Anil Goel, the Group Chief Technology Officer (CTO) and President of Technology, resigned after working for almost three years in the company.

To fill this gap, Byju's elevated Jiny Thattil, previously the Senior Vice President at Byju's owned EPIC, to the role of the Group CTO.

The sale of assets

Byju’s is also reportedly in the process of selling its global acquisitions, Epic and Great Learning, to help repay creditors of its $1.2-billion term loan B. 

Apart from all these issues, the startup is also grappling with legal challenges, including a case filed by the Board of Control for Cricket in India (BCCI) over delayed sponsorship payments. Additionally, the Central Consumer Protection Authority has imposed a penalty on Byju’s for misleading advertisements, a decision the company plans to appeal.

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