Byju’s was unable to pay salaries to employees as the funds raised through a recent rights issue have been locked in a “separate account” due to the ongoing dispute with the investors, founder Byju Raveendran said on March 2, according to news agency PTI.
Few investors “stooped to heartless level”, ensuring that the company was unable to utilise the raised funds to pay salaries, Raveendran reportedly told the staff.
Byju’s investors, including Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA, have opposed the company’s decision to raise $200 million at a post-money valuation of $225 million, which is 99 percent lower than the company’s last funding round which happened at a valuation of $22 billion.
On February 23, Byju’s shareholders, comprising prominent investors, had voted unanimously for removing founder-CEO Raveendran and his family from the board over alleged “mismanagement and failures” at what was once India’s hottest startup, but the company hit back calling the voting done in the absence of founders as invalid and ineffective.
Sources close to the investors had said more than 60 percent of the shareholders voted in favour of all the seven resolutions at the extraordinary general meeting, which included removing the current management, reconfiguration of the board and a third party forensic investigation into acquisitions done by the company. Contesting investors’ claims, sources close to Byju’s had put the number at 47 percent.
Prosus — one of the six investors who had called the EGM — in a statement last week had said shareholders unanimously passed all resolutions put forward for vote. These included a request for the resolution of the outstanding governance, financial mismanagement and compliance issues at Byju’s; the reconstitution of the board of directors, so that it is no longer controlled by the founder of Think and Learn Pvt Ltd, the parent entity of Byju’s; and a change of leadership of the company.
The once-storied edtech startup, Byju’s rose to dizzying heights before its perilous fall. While return of students to physical classes post-pandemic and the recent acquisition of Aakash put Byju’s under financial strain, the edtech firm in last one year suffered others setbacks, including its auditor resigning, lenders beginning bankruptcy proceedings against a holding company, and a US lawsuit disputing the terms and repayment of a loan.
Source: MoneyControl
