The board of Byju's parent company Think and Learn Private Limited has approved the rights issue to raise $ 200 million or Rs 1,663 crore from existing investors. According to sources, this rights issue has been launched on January 29 and will be valid for the next 30 days.
Sources said this rights issue will be at a post-money valuation of $225 million or Rs 1,871 crore. This is 99% less than the company's previous funding round, which was done at a valuation of $22 billion i.e. Rs 1.82 lakh crore. This would also mean that the pre-money valuation of Byju's would now be $25 million i.e. Rs 207 crore, which is 99.9% lower than the previous funding round.
According to people associated with the development, the company expects most of the existing investors, including founder Byju Raveendran, to participate in this round. The subscription price has been kept minimal so that all existing investors can participate and make profits.
The price under a rights issue is usually much lower than the fair market valuation of a company to attract existing investors. Byju Raveendran sent a letter to shareholders informing them about the board's decision to raise money from the rights issue.
According to a source, Byju's is planning to reconstitute the board after completing the audit for FY2023. The startup's board currently includes Byju Raveendran, his wife and co-founder Divya Gokulnath and his brother Riju Raveendran.
Raveendran said in the letter, 'We believe that fund raising will provide the company with the necessary resources to rebuild and expand. The funds will be used to continue business operations, manage liabilities and make the company more sustainable.
This rights issue has come at a time when the startup is facing a severe cash crunch. It is being said that Byju Raveendran has even mortgaged his house to pay the salaries of thousands of employees. Lenders and vendors have dragged Byju's to court under bankruptcy rules for non-payment of dues.