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From $22 billion to $225 million: Byju's faces 99% valuation cut after launching $200 million rights issue

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ISN Team
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byjus valuation drop

Troubled Byju’s, once the world’s most valuable edtech startup, has drastically reduced its valuation by 99% in a newly launched rights issue. 

The Bengaluru-based startup, which has been grappling with financial hurdles, aims to raise $200 million through this issue, a move deemed essential to address its working capital needs and prevent further value impairment. 

The dramatic drop sets the company's post-money valuation between $220 million to $225 million, a stark contrast to its peak $22 billion valuation in 2022.

Founders’ investment 

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Byju Raveendran, the founder of Byju’s, has communicated to shareholders the significant personal investments made by the founders, totalling over $1.1 billion in the past 18 months, to keep the business afloat.

Financial struggles 

Byju’s has faced a severe funding crunch, leading to this rights issue. The company, known for its aggressive acquisition strategy, spending $2.5 billion on over a dozen firms in 2021 and 2022, has been chasing new funding for nearly a year.

The startup's plans for an IPO and a $1 billion funding round were derailed due to market conditions and internal challenges, including the resignation of senior leadership, key board members and auditors.

Focused on operational profitability

Despite the valuation cut, Byju Raveendran remains optimistic about the company's future. He claims that Byju's is on the verge of achieving operational profitability within a quarter.

The funds raised will be used to clear immediate liabilities and meet operational requirements, maintaining the rights of current shareholders, media reports claimed.

Legal challenges

Byju’s is also facing legal challenges, with a significant portion of its lenders filing an insolvency petition with the National Company Law Tribunal (NCLT) Bengaluru.

The move comes as the company is negotiating with lenders to settle its $1.2 billion Term Loan B debt. Byju's has termed these claims as "premature and baseless," stating that the validity of lenders' actions is under challenge in several proceedings, including before the New York Supreme Court.

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