Byju Raveendran, the founder of once the highest-valued edtech Byju’s, broke his silence in nearly two years amidst the company’s financial struggles. In his first public statement since the company’s downward spiral, Raveendran said he would return to India to teach soon.
“I’ll come to India and I’ll fill stadiums... The timing we have not decided, but it will be soon,” said the ever-optimistic founder at a press conference.
The founder underscored the difficult uphill journey of the edtech start-up and expressed his regret on investors resigning from the board at the same time in 2023, which was one of the biggest setbacks for the firm, making it impossible for the company to raise funds.
“When the US lenders called a default and filed in the Delaware court, within two weeks, all three directors resigned. Those three board members resigning together...is what made it almost impossible for us to do any more fundraising or equity raising. Even if they wanted to resign, if a transition or a vote for reconstitution had been planned, the company wouldn’t be in the situation it is today,” Raveendran said.
The starting point
In June 2023, three board members — GV Ravishanka, Managing Director of Peak XV Partners, an early investor in Byju’s; Russell Dreisenstock of Prosus; Vivian Wu, Chan Zuckerberg Initiative — resigned, citing differences with the company’s founder and CEO, Raveendran.
During the peak of the start-up’s aggressive expansion in 2020-21, he said that the mandate from some investors was to ‘expand to 40 markets,’ which he said was essential to the company’s growth trajectory.
However, he expressed frustration over the lack of support during tough times.
“Many ran away after the bad spell started. At the time, our board approved all major acquisitions and expansion plans with unanimous 6-0 voting. Today, it’s ironic that the same people are quick to criticise,” Raveendran said.
He added that the real beneficiaries of the growth were the investors. “Sequoia made almost an 8x return on a $50-million investment in no time. Some of these board members made more money from our company than any other in Asia,” he added.
Term loan B
Talking about the $1.2-billion term loan secured from US lenders, he said it was used for both organic and inorganic international growth, including several smaller global acquisitions. “I thought we made the best decision in the world when we took the Term Loan B (TLB). It was the easiest capital, but it became the most expensive one,” he added.
“Everything started with the liquidity crunch…while we were still halfway through most of our acquisitions,” highlighting that the global financial environment began to change too.
The remarks were made as the company is fighting bitter court battles with investors and lenders. “We are hoping for a favourable outcome in the court,” he remarked.
Raveendran stressed that there is no fraud in the company.
No fraud
“We have not made any intentional mistakes. We have never siphoned off money. There is no fraud. If there were fraud, the founders would take money out, but we have reinvested our money back into the company,” he added.
He acknowledged that the company’s current crisis was partly due to misjudgments in its strategy. They had overestimated growth potential over the next few years and expanded into multiple markets too rapidly, which led to challenges from taking on too much too quickly.
“Today, Byju’s is worth zero. We have lost the confidence of the investors, and the situation has become dire due to our debts and the operational issues we are facing,” he noted.
Despite challenges, Raveendran said that he is committed to turning things around. “I have been on the edge so many times... I only need to see 1 per cent chance to make it work.”