Byju's to slash valuation by over 90% to raise fresh funds: Report

Beleaguered edtech startup Byju's is looking at raising fresh funds at a discount of over 90 per cent from its previous valuation to get rid of its financial problems, said a report on Tuesday. The startup is seeking more than $100 million from existing investors via a fresh issuance of shares scheduled for February 2024. 

Backed by the Chan Zuckerberg Initiative, General Atlantic and Prosus NV, Byju's, once among the world's most valuable startups, faced many challenges with venture capital (VC) funding and the demand for online learning becoming scarce in a post-COVID world.

In this round, Byju's is asking for over $100 million at a price that values it less than $2 billion. This is around 90 per cent less than the $22 billion valuation the firm received during its previous round of funding in late 2022, Bloomberg reported citing people aware of the matter. 

Byju's founder Byju Raveendran will participate in the share sale to keep his stake in the startup, the sources told Bloomberg on the condition of anonymity. The company is expected to utilise the proceeds from this share sale towards paying off vendors and stabilising the business, sources further said. 

This, however, is not the only challenge facing Byju's as the firm is in the process of selling its US-based kids’ digital reading platform Epic for around $400 million. The firm is also embroiled in a legal battle with creditors over a missed interest payment on a $1.2 billion term loan. 

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

Besides this, the beleaguered edtech startup is focusing on rebuilding its core business and will also ramp up its attempts to catch up with the latest trends in education-- generative artificial intelligence for so-called hyper-personalized learning, after the share sale, the people said.

Moreover, the firm on Tuesday finally disclosed its financial results for FY22 after a delay of 22 months. Byju's consolidated revenue rose by 118 per cent from Rs 2,428 crore in FY21 to Rs 5,298 crore in FY22. The growth in consolidated revenue was, however, marred by the company's net losses.

Byju's net losses went up from Rs 4,564 crore in FY21 to a massive Rs 8,245 crore in FY22. The company also managed to reduce its EBITDA loss from Rs 2,406 crore in FY21 to Rs 2,253 crore in FY22, improving the EBITDA margin from -155 per cent to -63 per cent.

Also Read: Byju's net loss soars to Rs 8,245 cr in FY22, revenue jumps 118%: Report

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