A group of large investors in Byju’s has called for an extraordinary general meeting (EGM) where they seek to change the leadership at Byju’s days after the edtech group launched a rights issue at $25 million pre-money valuation.
The consortium of investors said it has called for the EGM following “many months of continued efforts” to address the “persistent issues” at Byju’s, which at the time of its last fundraise in 2022 was the most valuable edtech globally. It initially issued the request for EGM in December before the rights issue.
At the meeting, Byju’s investors said they are seeking a resolution of the “outstanding governance, financial mismanagement and compliance issues; the reconstitution of the Board of Directors, so that it is no longer controlled by the founders of T&L; and a change in leadership of the Company.”
Prosus, General Atlantic, Peak XV, Chan Zuckerberg Mauritius, Owl Ventures and Sofina are among those requesting the EGM, a source directly familiar with the situation told TechCrunch.
Tension between the investors and Byju’s founders has escalated in the past year over governance issues, which in part prompted Prosus, Peak XV and Chan Zuckerberg Initiative to abruptly resign from the startup’s board last year. Global auditor Deloitte also resigned, airing a series of grievances.
The call for the EGM follows Byju’s, the most valuable Indian startup, cutting its valuation ask by 99% in a rights issue it launched earlier this week to meet its liabilities and operational costs. The startup said it was looking to raise $200 million in the rights issue, capital it said was “essential to prevent any further value impairment.”
The startup reset its valuation to $25 million pre-money valuation in the rights issue, according to sources familiar with matter. Byju’s has raised over $5 billion in debt and equity.
In a letter to shareholders earlier this week, Byju’s founder Byju Raveendran sought investors’ continued support and said the founders had made “immense personal sacrifices for the sake of the company.” He added: “We have spent our lives building this company and are fervent believers in its mission.”
Raveendran said in the letter that he and other founders of the edtech group had invested $1.1 billion — much of it borrowed capital — into the Bengaluru-headquartered startup in the last 18 months.
Here is the full statement from the investor consortium:
As investors with a track-record in supporting the Indian start-up sector over many years, we are strongly committed to serving the long-term interests of the companies in which we invest and their stakeholders.
With this in mind, pursuant to the rights granted to shareholders under the Companies Act, 2013, a notice has [today] been issued to Think & Learn Private Limited (T&L) shareholders requesting an extraordinary general meeting (EGM) to address persistent issues. The request for an EGM is supported by a consortium of T&L shareholders and follows earlier notices of requisition sent to the T&L Board of Directors in July and December 2023, which were disregarded.
The resolutions being put forward for the EGM to consider include a request for the resolution of the outstanding governance, financial mismanagement and compliance issues; the reconstitution of the Board of Directors, so that it is no longer controlled by the founders of T&L; and a change in leadership of the Company.
The issuance of this EGM notice follows many months of continued efforts by shareholders to engage with the Company to address persistent issues relating to corporate governance, mismanagement and compliance. These efforts have been ongoing following the resignationfrom the Board in June 2023 of directors nominated by Prosus and other shareholders.
While we are grateful for the efforts of the independent advisory council in addressing some of the looming challenges facing T&L, we are deeply concerned about the future stability of the Company under its current leadership and with the current constitution of the Board.
We believe wholeheartedly in India and in the transformative role that education technology can play in improving teaching and learning. We also continue to believe in the role and contribution of BYJU’s. As shareholders, we will continue to assert our rights, in collaboration with other shareholders and government authorities to safeguard the long-term interests of the Company and its stakeholders.
The story was updated to note that Chan Zuckerberg Mauritius — not Chan Zuckerberg Initiative — was a signatory on the EGM notice. A Chan Zuckerberg Mauritius spokesperson told TechCrunch in a statement: “Neither Chan Zuckerberg Mauritius nor Chan Zuckerberg Initiative were signatories on the separate investor statement. Chan Zuckerberg Mauritius is one of several BYJU’s shareholders who jointly issued to the Board of Directors of Think & Learn Private Limited a notice of requisition to call an extraordinary general meeting of shareholders. We look forward to having the concerns raised by the shareholders addressed at this meeting.”