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Byju\u2019s, the world\u2019s most valuable edtech startup, has cut its valuation ask to $250 million in a rights issue it launched Monday as the Indian firm works to address its working capital needs. The startup is looking to raise $200 million in the rights issue, a capital it said is \u201cessential to prevent any further value impairment.\u201d<\/p>\n
The startup is resetting its valuation to \u201cnext to nothing\u201d in the rights issue, where all existing investors have an opportunity to participate, according to a source familiar with the matter. If Byju\u2019s succeeds in raising $200 million, the post-money valuation of the startup will be in the range of $220 million to $250 million, a 99% drop from the $22 billion value that the startup had attained in 2022, according to the source, who requested anonymity sharing nonpublic information.<\/p>\n
Byju\u2019s founder Byju Raveendran told shareholders in a letter Monday that he and other founders of the edtech group have invested $1.1 billion into the Bengaluru-headquartered startup in the last 18 months and seek continued support from the investors. \u201cWe 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,\u201d Raveendran wrote in the letter, seen by TechCrunch.<\/p>\n
The rights issue comes as Byju\u2019s looks to secure capital amid a severe funding crunch. The startup, which spent $2.5 billion acquiring more than a dozen firm in 2021 and 2022, has raised more than $5 billion in equity and debt from backers including Peak XV, Lightspeed, Chan Zuckerberg Initiative, BlackRock, UBS, Prosus Ventures and B Capital. Byju\u2019s said in a statement that it expects the rights issue to close in 30 days.<\/p>\n
\u201cIt 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,\u201d Raveendran wrote in the letter.<\/p>\n
Byju\u2019s has been chasing for new funding for nearly a year. The startup was in final stages to\u00a0raise about $1 billion last year<\/a>, but the talks derailed after the auditor Deloitte and three key board members quit the startup. Instead, Byju\u2019s ended up raising less than $150 million in that round from Davidson Kempner and had to repay the investor the full committed amount after\u00a0making a technical default in a separate $1.2 billion term loan B<\/a>.<\/p>\n The new funding deliberation follows BlackRock cutting the value of its holding in Byju\u2019s, slashing the implied valuation of the Indian startup\u00a0to about $1 billion<\/a>, according to disclosures made by the asset manager earlier this month.<\/p>\n Byju\u2019s was preparing to go public in early 2022 through a SPAC deal that would have valued the company at up to $40 billion. However, Russia\u2019s invasion of Ukraine in February sent markets downward, forcing Byju\u2019s to put its IPO plans on hold, according to a source familiar with the matter. As market conditions worsened, so too did the business outlook for Byju\u2019s.<\/p>\n<\/p><\/div>\n