My head is bloody, but unbowed: Byju's CEO in a letter to shareholders

Byju Raveendran, the founder of Byju's, wrote a letter to the company's shareholders explaining the need for a capital raise at a significantly lower valuation of $220-250 million.

He describes recent challenges faced by the company and the importance of this capital raise to prevent value impairment and support the company's mission.

Here's the letter

Dear Shareholders,

The past few months have been tough on our Company as it faces challenges few companies ever have. While a lot has changed in terms of the macro environment, what remains unchanged is the resolve and belief we have in the mission of the Company. In these uncertain times, we have not shied away from taking several tough decisions in the best interest of the Company, and we will continue to do so in the coming months.

It has been 21 months since our last external capital raise, during which we have cut our burn and worked to become a lean organization, razor-focused on execution. The Board believes it is imperative that the Company raises capital in order to create a glidepath to deliver strong shareholder value. This capital raise is essential to prevent any further value impairment and to equip the company with necessary resources to deliver on its mission.

Our gratitude for your role in our journey remains strong. As we explore all possible avenues, we would like to keep our shareholders apprised of our thought process. 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.

We are exploring a rights issue for this capital raise, which will offer all our existing shareholders the opportunity to participate in this proposed capital raise, to the extent of your shareholding and beyond. We plan to hold a board meeting to decide the course of action and we shall brief all shareholders about the decision of the Board. We hope that you, as our shareholders, will extend your support to us.

One of the reasons we are considering a rights issue is that it allows every shareholder an equal opportunity to participate and maintain their respective shareholding in the Company. We are aware that there has been media speculation on the current valuation of the Company. A rights issue, by design, is a participatory pro-rata means of raising capital, wherein existing shareholders have the right and the privilege of contributing to the needs of the company. It is an equal opportunity to all shareholders to participate and maintain shareholding without the need to ascribe valuations. We shall take a decision in the larger interest of the Company.

We know that you have the best interests of the Company in mind and trust that you shall act in good faith to support the Company through this period. For us, protecting Shareholder interest against permanent impairment is of utmost importance, and will underscore the decision that we take.

As you know, we as the Founders have infused over USD 1.1 bn into the Company over the past 18 months, as a testament to the steadfast and continuous faith in the business and its mission. 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. Our enthusiasm and zeal continue unabated. As we prepare to face any challenge in the future, we draw inspiration from these lines in 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."

Byju's valuation cut

Earlier this week, Byju's reduced its valuation by 99% in a newly launched rights issue. The Bengaluru-based startup 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.

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.

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