Byju’s looks for fresh funding with a valuation below $2 billion, experiencing a 90% drop
- ByStartupStory | January 23, 2024
Once valued at $22 billion, Byju’s is now seeking fresh funding at a valuation below $2 billion, marking a staggering 90% drop in its worth, according to a source familiar with the matter as reported by TechCrunch.
The Bengaluru-based edtech giant, once India’s most valuable startup, aims to secure $100 million to $200 million in new funding through a rights issue, with CEO and co-founder Byju Raveendran expected to contribute, said an anonymous source privy to the matter.
The startup, which spent over $2.5 billion acquiring global firms in 2021 and 2022, had previously been valued as high as $50 billion by prominent investment bankers.
The pursuit of new funding has been ongoing for almost a year, with talks of a $1 billion raise last year disrupted by the departure of auditor Deloitte and three key board members. Consequently, Byju’s secured less than $150 million from Davidson Kempner and had to repay the investor the full committed amount after a technical default in a separate $1.2 billion term loan B.
The current funding deliberation follows BlackRock’s devaluation of its holdings in Byju’s, lowering the implied valuation to around $1 billion.
Byju’s had initially planned to go public in early 2022 through a SPAC deal that could have valued the company at up to $40 billion. However, geopolitical events, such as Russia’s invasion of Ukraine in February, prompted a market downturn, forcing Byju’s to postpone its IPO plans.
As market conditions worsened, so did Byju’s business outlook, leading to increased pressure from investors to address unresolved issues.
The startup, backed by industry heavyweights including Peak XV Partners, Lightspeed, UBS, and the Chan Zuckerberg Initiative, gained initial popularity in India for its innovative tutoring methods using real-life objects like pizza and cake to explain complex concepts.
Byju’s, grappling with challenges in raising capital, meeting payroll, and paying off over a billion dollars in debt, disclosed a missed revenue target for the financial year ending in March 2022. In July, Prosus publicly criticized the startup for insufficient evolution and disregard of investor advice, despite repeated attempts. The company is yet to file financials for the year ending March 2023.
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