Once a unicorn, Byju's slashes valuation by 90% to raise funds as it files financials after 22-month gap

Byju’s, a beleaguered edtech startup, is going to slash valuation by more than 90 per cent from its previous round to raise fresh funds and alleviate its financial troubles.

Once counted among the world’s most valuable startups, Byju’s is seeking more than $100 million from existing investors through a fresh issuance of shares scheduled for February 2024, at a price that values the firm at less than $2 billion, which is around 90 per cent less than the $22 billion valuation the firm received during its previous round of funding in late 2022, a report by Bloomberg cited people familiar with the matter as saying.

Byju Raveendran, founder of Byju’s, will participate in the share sale to keep his stake in the startup, the report quoted sources saying on the condition of anonymity.

The sources were further reported saying Byju’s is expected to utilise the proceeds from this share sale towards paying off vendors and stabilising the business.

Byju’s has been battling a cash crunch for several months.

Trouble for Byuj’s

Byju’s has been facing challenges with venture capital (VC) funding and drop in the demand for online learning post-COVID.

Raveendran has also been facing challenge to keep the company afloat and to ease its financial pressures. Byju’s is also in the process of selling its US-based kids’ digital reading platform for about $400 million and is embroiled in a legal battle with creditors over a missed interest payment on a $1.2 billion term loan.

Global investment firm BlackRock has also reduced its valuation of Byju’s to $1 billion, a massive decline from $22 billion in early 2022. Tech investor Prosus too has reduced the value of its stake in the firm to less than $3 billion, 86 per cent less from the previous valuation.

Byju’s – formally known as Think & Learn Pvt – and backed by the Chan Zuckerberg Initiative, General Atlantic and Prosus NV, has raised billions of dollars to finance a global acquisition spree before it ran into a worldwide tech funding downturn. Several shareholders in the company are expected to participate in the share sale, the reported cited people as saying.  

Byju’s finally discloses financial results for FY22

Byju’s, finally on Tuesday (23 January), filed its FY22 financials with the Ministry of Corporate Affairs (MCA) almost 22 months after the reporting period ended.

Its consolidated revenue jumped 118 per cent from Rs 2,428 crore in FY21 to Rs 5,298 crore in FY22, whereas losses spiked from Rs 4,564 crore in FY21 to Rs 8,245 crore in FY22.

Byju’s FY22 financials showed that 69 percent or Rs 3,464 crore of the company’s operating revenue of Rs 5,014 crore came from domestic sales, whereas the rest came from exports.

In the FY22 financials, the Byju’s auditor warned that a material uncertainty exists due to its large losses and a $1.2 billion loan that may cast significant doubt on the group’s ability to continue as a going concern.