India's most valuable startup is now its highest-profile mess
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Byju's last year was India's most valuable startup, worth $22 billion. And the ed-tech company was prized beyond its price, offering remote tutoring in a country where over half the population lives in rural areas.
Fast forward: Byju's is now the dumpster fire that other dumpster fires look at with pity.
Driving the news: Venture capital shareholders, who've invested over $5 billion into the company, late last week held an emergency general meeting to remove founding CEO Byju Raveendran, who they've accused of mismanaging everything from compliance to finances to governance.
- Raveendran didn't attend the EGM, but responded by calling it invalid.
- A court had denied his request to stay the EGM, but did hold the results in abeyance until after a full hearing (which could occur this week).
- There's also a parallel legal process tied to a $200 million rights issue, which reportedly would cut the company's valuation by around 99%.
Zoom in: All of the investor reps on Byju's board quit last year, claiming they couldn't access recent and accurate financial data. As part of the EGM resolution, a new board would be formed that could include Raveendran, but not be controlled by him.
- Two investors tell Axios that they don't really know how much of Byju's they currently own, because data tied to the rights issue differs from their internal documentation.
- Raveendran didn't return an emailed request for comment.
The big picture: It's not entirely clear why investors are bothering with all the legal maneuvering, outside of pique.
- Even if Byju's somehow retained its unicorn status, it's unclear the company would have more equity than debt. Moreover, its U.S. unit filed for bankruptcy protection earlier just two weeks ago.
- "It may become a total write-off, but we don't know because we don't have enough financial visibility," one source explains. "There certainly could be pockets of profitability, or products that could be profitable with different leadership."
The bottom line: Byju's grew too big too fast during the pandemic, not recognizing that schools would reopen, thus reducing demand for some of its services. But its current troubles go beyond those faced by other members of the covid cohort.
