After months of behind-the-scenes conflict, Byju’s and some of its biggest investors are now publicly airing their grievances about each other.
Byju’s, once India’s most valuable startup, said on Friday that its investors have no voting rights to seek leadership changes, a day after a group of shareholders called an extraordinary general meeting to oust founder Byju Raveendran and his family of the top roles in the edtech team.
In a press release, Byju’s said it will continue the consultation to raise $200 million in a rights issue, for which it has received “encouraging responses from multiple investors.”
Separately, Byju leadership informed workers earlier on Friday that the current rights issue has already received pledges for “more than 100 percent of the proposed amount.” They accused investors of “seeing the crisis” as an “opportunity to plot” and demanded Raveendran’s removal.
Byju’s management also blamed “artificially induced crisis” by select investors for the “slight delay” in payment of January payroll.
Investors including Prosus, General Atlantic, Peak XV and the Chan Zuckerberg Initiative said in a statement Thursday that they are seeking to resolve “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 the Company’s leadership”.
It is the third time that investors have requested an extraordinary general meeting (EGM). The new request follows the start of a rights issue by Byju to raise capital it said was necessary for its survival. The Bengaluru-based startup, once valued at $22 billion and which has raised more than $5 billion, brought its valuation back to $25 million in the rights issue, TechCrunch previously reported.
Here is Byju’s full statement on Friday:
Think & Learn Private Limited, the parent of BYJU’S, has noted with regret the statements of some partial investors calling for an extraordinary general meeting (EGM) to replace the group’s founder and managing director Byju Raveendran. In these unfortunate circumstances, we would like to emphasize that the shareholders’ agreement does not give them the right to vote for a change of CEO or management.
TLPL will proceed with its proposed $200 million rights issue after receiving encouraging responses from several investors. The company is happy for the support it received from a wide range of its shareholders
The criticality of the rights issue is shared by all shareholders, with capital being critical to a successful turnaround. Unfortunately, our company and employees are paying the price for an attitude caused by some investors. Business continuity is essential and we will prioritize this in our actions.
Byju Raveendran and his leadership team kept TLPL afloat after three investors left the company’s board last year, triggering a wider crisis. The company, along with its advisory board consisting of Rajneesh Kumar and Mohandas Pai, formed a working group with the investors to find a constructive way forward.
The company and its management have briefed the task force on all critical issues, including the ongoing business restructuring, financial position and audits. TLPL is turning the business around, reducing monthly profit almost to the operating ceiling and is soon working on a technological revamp with artificial intelligence. In this context, the actions of some unnamed investors are disruptive at an extremely difficult time.
TLPL will remain on the road to dialogue even as the founders and leadership find ways to meet the company’s growing obligations, including salary payments. We want to re-emphasize that the company has had no funding from outside investors for nearly two years, other than the founder pouring in over $1 billion — one reason why it launched a rights issue as a quick and fair way to raise money.
