Troubled edtech Byju's founder Byju Raveendran spoke to media for the first time since his financial troubles began, and expressed regret over investors ditching the startup in the face of ongoing challenges, worsening the company's uphill climb.
"When the US lenders called a default and filed in the Delaware court all three directors resigned within weeks. Three investors leaving the board together made new fundraise impossible and that is why we're here," Raveendran said, underscoring the impact these departures have had on the company's ability to secure much-needed capital in turbulent times.
The situation has been exacerbated by a broader trend among investors, with Raveendran pointing out that "some investors—including Prosus—have not invested anything in 4-5 years."
During the peak of Byju's aggressive expansion in 2020-21, the mandate from some investors was to "expand to 40 markets," a strategy that Raveendran defended as essential to the company’s growth trajectory. However, he expressed frustration over the lack of support during tough times. "Many 'ran away' after the bad spell started fearing liabilities," Raveendran said.
"The mandate from every investor back then was to grow aggressively. Some even pushed us to enter 40 markets simultaneously. They were the real beneficiaries of that growth. Sequoia made almost an 8x return on a $50 million investment in no time. Some of these board members made more money from our company than any other in Asia," he said.
"Board members who benefited the most during the rapid growth are now distancing themselves, but they were instrumental in pushing for that aggressive expansion. Most of the acquisitions were brought in by investors, and we got carried away. That's a mistake," Raveendran added.
"Many ran away after the bad spell started. At the time, our board approved all major acquisitions and expansion plans with unanimous 6-0 voting. Today, it's ironic that the same people are quick to criticize," said Raveendran.
Raveendran’s remarks come amidst his ongoing legal battle with investors in US and Indian courts ranging from loan repayment to allegations of mismanagement.
Reflecting on the operational missteps that led to the current crisis, Raveendran said, "In hindsight, it's very easy to explain the missteps... we overestimated the potential growth in the next two to three years and entered a lot of markets too soon. It was a little too much, too fast."
"Today, Byju's is worth zero. We have lost the confidence of the investors, and the situation has become dire due to our debts and the operational issues we are facing," said Raveendran.
Despite these challenges, Raveendran emphasised his commitment to turning things around. "I have been on the edge so many times... I only need to see 1 percent chance to make it work." He acknowledged the tumultuous period following the mass resignations, saying, "This is where Byju's trouble began and three board resignations made fundraise impossible."
While expressing frustration, Raveendran struck a tone of restraint, saying he is "not blaming them still."
In June 2023, three members of Byju’s board, along with its official auditor Deloitte, resigned, adding to the mounting troubles for the edtech major. Subsequently, early backer GV Ravishankar, managing director at Peak XV Partners (formerly Sequoia Capital India), Russell Dreisenstock of Prosus (previously Naspers), and Chan Zuckerberg Initiative’s Vivian Wu all stepped down from the board. The development intensified the downward spiral at what was once the most-valued privately held Indian startup which had reached a peak valuation of $22 billion.
The crisis unfolded as the Bengaluru-based edtech firm grappled with court cases involving lenders, loan defaults, valuation markdowns by existing investors, and delays in filing its financial results for the year ending March 31, 2022.
The insolvency proceedings against Byju's began in June 2024 after the BCCI alleged that Byju's defaulted on a payment of Rs 158.9 crore related to a sponsorship deal. US-based financial creditor Glas Trust had objected to the settlement between Byju's and the BCCI, claiming that the money was “tainted” and had been misappropriated from them.
As of September 26, 2024, the Supreme Court of India has reserved its judgment on a petition challenging the National Company Law Appellate Tribunal's (NCLAT) decision to allow a settlement and the verdict on whether the firm will undergo restructuring or liquidation is awaited.
In a separate proceeding, a group of investors including General Atlantic Singapore TL Pte Ltd, Peak XV Partners Investments IV, Sofina SA and MIH Edtech Investments have moved the Supreme Court, alleging violation of law and corporate governance norms and mismanagement by the founders in managing company affairs.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
