A group of major investors in Byju’s has called for an extraordinary general meeting where they are seeking to change leadership in Byju’s days after the edtech group launched a rights issue at a $25 million pre-money valuation.
The investor consortium said it called for the EGM after “many months of ongoing efforts” to address “persistent issues” at Byju’s, which at the time of its last fundraising in 2022 was the world’s most valuable edtech. It originally issued the request for an Extraordinary General Meeting in December before the rights issue.
At the meeting, Byju’s investors said they were seeking a resolution of the “outstanding governance, mismanagement and compliance issues. the reconstitution of the Board of Directors so that it is no longer controlled by the founders of T&L? and change in the Company’s leadership”.
Prosus, General Atlantic, Peak XV, Chan Zuckerberg Initiative, Owl Ventures and Sofina are among those who have requested the EGM, a source with direct knowledge of the situation told TechCrunch.
Tension among investors in Byju’s founders has escalated in the past year over governance issues, which in part prompted Prosus, Peak XV and the Chan Zuckerberg Initiative to abruptly step down from the startup’s board last year. Global auditor Deloitte also resigned, citing a range of grievances.
The EGM call follows Byju’s, India’s most valuable startup, slashing its valuation by 99% in a rights issue launched earlier this week to cover liabilities and operating costs. The startup said it was trying to raise $200 million for the rights issue, capital it said was “essential to avoid any further impairment.”
The startup raised its valuation to a $25 million pre-money valuation in the rights issue, according to sources familiar with the matter. Byju’s has raised over $5 billion in debt and equity.
In a letter to shareholders earlier this week, Byju founder Byju Raveendran asked for investors’ continued support and said the founders had made “enormous personal sacrifices for the sake of the company”. He added: “We have spent our lives building this company and we believe strongly in its mission.”
Raveendran said in the letter that he and other founders of the edtech group have invested $1.1 billion — much of it borrowed capital — into the Bengaluru-based startup over the past 18 months.
The full statement from the consortium of investors:
As investors with a track record of supporting the Indian startup sector for many years, we are strongly committed to serving the long-term interests of the companies we invest in and their shareholders.
Keeping this in mind, in accordance with the rights provided to shareholders under the Companies Act, 2013, an announcement has [today] issued for the shareholders of Think & Learn Private Limited (T&L) calling for an extraordinary general meeting (EGM) to deal with outstanding issues. The request for an EGM is supported by a consortium of T&L shareholders and follows previous demand notices sent to the T&L Board in July and December 2023, which were not heeded.
The resolutions submitted for consideration by the EGM include a request to resolve the outstanding governance, financial mismanagement and compliance issues. the reconstitution of the Board of Directors so that it is no longer controlled by the founders of T&L? and change in Company leadership.
The issuance of this notice of the EGM follows many months of continuous efforts by shareholders to work with the Company to address persistent issues related to corporate governance, mismanagement and compliance. These efforts continue following the resignation from the Board in June 2023 of directors appointed by Prosus and other shareholders.
While we are grateful for the efforts of the independent advisory board to address some of the looming challenges facing T&L, we are deeply concerned about the future stability of the Company under its current leadership and with the current composition of the Board of Directors.
We wholeheartedly believe in India and the transformative role educational technology can play in improving teaching and learning. We also continue to believe in the role and contribution of BYJU’s. As shareholders, we will continue to assert our rights, in cooperation with other shareholders and government authorities to safeguard the long-term interests of the Company and its shareholders.
