April 15, 2024
Byju says investors do not have voting rights to remove founder from edtech group. techcrunch


After months of behind-the-scenes conflict, Byju’s and some of its biggest investors are now publicly airing their grievances about each other.

Byju’s, once India’s most valuable startup, said on Friday that its investors do not have voting rights to demand a leadership change, a day after a group of shareholders ousted founder Byju Raveendran and his family from the top spot. An extraordinary general meeting was called to remove him from the roles. EdTech Group.

In a press release, Byju’s said it would continue its discussions to raise $200 million in a rights issue, for which it had received “enthusiastic responses from multiple investors”.

Separately, Byju’s leadership informed employees early on Friday that the ongoing rights issue has already received commitments for “more than 100 per cent of the offered amount”. He accused investors of “seeing the crisis” as an “opportunity to plot” and demanding Raveendran’s removal.

Byju’s leadership also blamed “artificially induced distress” by select investors for the “minor delay” in making January payrolls.

Investors including Prosus, General Atlantic, Peak Reorganization of the board of directors, so that it is no longer controlled by T&L’s founders; And changes in company leadership.”

This was the third time investors had demanded an EGM meeting. The new request comes after Byju’s launched a rights issue to raise capital, which it said was essential for its survival. The Bengaluru-headquartered startup, which was once valued at $22 billion and has raised over $5 billion, has cut its valuation to $25 million in the rights issue, TechCrunch had earlier reported.

Byju’s full statement on Friday:

Think & Learn Private Limited, parent of BYJU’S, notes with sadness the statement of some select investors demanding an extraordinary general meeting (EGM) to replace Founder and Group CEO BYJU’S Raveendran . In these unfortunate circumstances, we would emphasize that the shareholder’s agreement does not give them the right to vote on CEO or management changes.

TLPL will proceed with the proposed $200 million rights issue after receiving an encouraging response from several investors. The company is pleased with the support it has received from a large section of its shareholders

The seriousness of the rights issue has been shared with all shareholders, with capital being critical for a successful transition. Unfortunately, the company and our employees are paying the price for the impasse created by some investors. Business continuity is essential and we will prioritize this in our actions.

Byju Raveendran and his leadership team have kept TLPL afloat after a widespread crisis erupted after three investors left the company’s board last year. The company, along with its advisory board of Rajneesh Kumar and Mohandas Pai, formed a working group with investors to find a constructive path forward.

The Company and its leadership have updated the Working Group on all important matters including the ongoing business restructuring, financial position and audit. TLPL is transforming the business, reducing monthly expenses to almost operating losses and is soon working on an AI-led technological revamp. In context, the actions of some anonymous investors are disruptive in extremely challenging times.

TLPL will remain on the path to negotiations even as the founders and leadership look for ways to meet the company’s growing obligations, including salary payments. We want to re-emphasise that apart from the founder investing over $1 billion the company has not had any external investor funding for almost two years – which is why it saw this as a quick and equitable way to raise money. Rights issue has been launched in.

Source: techcrunch.com

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