Edtech giant Byju’s is facing a leadership crisis as shareholders push for a change in management amid concerns about the company’s stability. The move follows massive layoffs and a significant dip in valuation, marking a stark contrast to its status as one of the hottest startups just two years ago.
Byju’s shareholders, including major players like Prosus Ventures, Sofina, Peak XV, General Atlantic, and Chan Zuckerberg Initiative, are expressing deep concerns about the future stability of the company under the current leadership. In a statement, Prosus Ventures, holding a 9% stake in Byju’s, revealed that they have the support of other shareholders, although specific names were not disclosed.
In a recent development reported by Livemint, a group of investors has called for an extraordinary general meeting (EGM) to propose a reconstitution of Byju’s board. This move aims to address governance, management, and compliance issues, with the ultimate goal of shifting control away from the founders. The notice for the EGM was initially sent in July, followed by another in December, after which the investors decided to take proactive steps in the interest of the company and its shareholders.
The shareholders, including Prosus Ventures, Peak XV, and Chan Zuckerberg Initiative, seek to reconstitute the board to ensure it is no longer dominated by the founders, signaling a significant leadership shift for the company.
Challenges in 2023
Byju’s faced a tumultuous year in 2023, marked by the resignation of Deloitte as its auditor. Deloitte cited a lack of necessary documents, despite repeated requests to the board. This led to delays in the release of financial statements for the year ending March 31, 2022. Furthermore, board members representing Peak XV, Prosus, and Chan Zuckerberg Initiative resigned from Byju’s board during the same year.
Founder Byju Raveendran responded to the challenges by invoking the words of William Ernest Henley’s ‘Invictus’ in a letter to shareholders. Despite the difficulties faced, Raveendran expressed resilience, stating, “In the clutch of circumstance I have not winced nor cried aloud. Under the bludgeonings of chance, ‘My head is bloody, but unbowed.’” He emphasized the need for an expeditious capital raise to rebuild, scale operations, manage obligations, and ensure the company’s sustainability.
Byju’s, once considered a shining success in the startup ecosystem, witnessed a significant decline in valuation, estimated to be between $1 billion and $3 billion, according to some investors. This stark contrast to its previous valuation highlights the challenges faced by the edtech giant.
In conclusion, the call for a change in leadership by Byju’s shareholders reflects the growing concerns over the company’s future trajectory. The upcoming extraordinary general meeting will be crucial in determining the fate of Byju’s leadership and the steps required to address the challenges faced by the edtech company.