Byju’s cuts asking price for rights issue valuation by 99% due to cash crunch | TechCrunch

Byju’s, the world’s most valuable edtech startup, slashed its asking price by 99% in a rights issue on Monday as the Indian company works to address its working capital needs. The startup, which hopes to raise $200 million through a share placement, said capital was “critical to preventing any further impairment of value.”

The startup, once India’s most valuable, is resetting its valuation to “almost zero” in a rights issue that will give all existing investors a chance to participate, people familiar with the matter said. If Byju’s succeeds in raising $200 million, the startup’s post-money valuation will be between $220 million and $250 million, up from the $220 million it reached in 2022, according to the sources, who requested anonymity to share non-public information. The valuation of US$100 million fell by 99%.

Shareholders of Byju founder Byju Raveendran said in a letter on Monday that he and the other founders of the edtech group invested $1.1 billion in the Bengaluru-based startup in the past 18 months and are seeking Continued support from investors to keep the business going. “We have made tremendous personal sacrifices for our company. We have spent our lives building this company and believe deeply in its mission,” Raveendran wrote in the letter seen by TechCrunch.

The rights issue comes as Byju’s looks to secure funds amid a severe cash crunch. Spend $2.5 billion to acquire more than a dozen companies in 2021 and 2022It has raised more than $5 billion in equity and debt from backers including Peak XV, Lightspeed, Chan Zuckerberg Initiative, BlackRock, UBS, Prosus Ventures and B Capital. Byju’s said in a statement that it expects the placement to be completed within 30 days.

“It has been 21 months since our last external financing, during which time we have reduced expenses and worked hard to become a lean organization with a focus on execution. The board believes that the company must raise capital to create a company,” Ravindran said in the letter wrote: “Our goal is to deliver strong shareholder value. “

Byju’s isn’t the only high-profile Indian startup to have struggled to raise capital in recent years. Online pharmacy startup PharmEasy Valuation cut by more than 90% The company raised less than $600 million in last year’s placement. Prior to the placement, the startup had raised more than $1.5 billion in equity and debt.

Byju’s has been seeking new funding for nearly a year.The startup is in its final stages Raised about $1 billion last yearBut talks collapsed after auditor Deloitte and three key board members quit the startup. Instead, Byju’s ended up raising less than $150 million from Davidson Kempner in that funding round and had to repay investors the full amount of the commitment later. Technical default on separate $1.2 billion Term Loan B.

Byju’s is preparing to go public in early 2022 through a SPAC deal that would value the company at as much as $40 billion. However, Russia’s invasion of Ukraine in February caused the market to fall, forcing Byju’s to shelve its IPO plans, according to one company. As market conditions deteriorate, so does Byju’s business outlook, people familiar with the matter said.

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