Investor-Backed Aggressive Growth Was A Mistake; Net Worth Down To Zero, Says Byju Raveendran
Raveendran said Byju's overestimated its growth potential but noted that all expansion decisions were unanimously approved by the board.
The eponymous founder of beleaguered Byju's on Thursday said the resignations of the three board members, who were also investor representatives, made bad times worse for the company, whose value is down to zero from $22 billion once.
Speaking to the media, Raveendran said the Term Loan B is where it all started going wrong, apart from the liquidity crunch due to the turning of the markets.
"End of May 2023, the lenders called a default and filed in Delaware. A month later, the three board members resigned. Those three resigned together; even the lenders didn't expect it. That made it almost impossible for any fundraising. Even if they wanted to plan and resign, the company wouldn't have been the way it is today," he said.
In June 2023, Byju's three directors, representing key investors, confirmed their resignations as the edtech faced lender and regulatory scrutiny.
Peak XV Partners' GV Ravishankar, Prosus' Russell Dreisenstock, and Chan Zuckerberg Initiative's Vivian Wu had stepped down from the board of Byju's parent company, Think & Learn Pvt.
He added that the mistake that the company made was to overestimate the potential growth in the next two-to-three years, but that it was the investors that pushed for aggressive growth.
"We entered a lot of markets together; it was a bit too soon. But all our acquisitions and growth plans were approved with unanimous voting of 6-0," he said.
He said some of these board members made more money than they've made from any company in Asia. "Peak XV made an almost eight-times return on a $50 million investment in no time. In fact, their mandate was to enter 40 markets together. With this valuation growth, who are the real beneficiaries? I'm sitting from Rs 7,500 crore to zero now," he said.
Nobody talks about the returns we've delivered and that better investors could've helped, Byju's said.
"In crisis times, these guys ran away from the board. In good times, they put money in, but in bad times, they didn’t. We gave out almost $2 billion to investors in returns. If we had investors that have overseen large companies, it would’ve been very helpful. Even if we had big U.S. firms, it doesn’t mean that they’ve seen scale. If we had people like Mohandas Pai earlier, it would’ve been good because they have seen scale in India," he said.
"In good times, investors (Peak XV and Prosus) wanted me to grow the business to $100 billion. They 100% don’t care about the students. For them, it’s just about financial returns. I got maximum support for WhiteHat Jr. acquisition and maximum resistance for Aakash. This shows there’s a big difference between those who have run businesses and those who have done it only on Excel sheets," he said.
He also clarified that currently, the Raveendran family owns over 26% of Think & Learn Pvt. "After funds infused, it has gone up significantly. I don't want to disclose the figure today," he said.
In subsidiary Aakash, the shareholding will stand at 40% with Ranjan Pai and the rest 60% with the family, with Raveendran's personal stake at 16% once the share swap with investors is completed.
"The share swap part of the deal with Blackstone-Chaudhary is not completed, but they will have to do it; a Singapore tribunal will rule in our favour," he said.
"Whatever the NCLAT order comes, I’ll find a way out. There is no problem in the world that can't be solved. I don't want to put a timeline, but I'll make a comeback. The meaning of a comeback isn't that I'll make a $20 billion company, but it means that I'll continue my mission. If I start a session, I can fill a stadium. I'm a hopeless optimist," he said.
On the revenue front, Raveendran said at its peak, Byju’s Learning App was at Rs 400 crore a month. "In the last three months, nothing has happened. The company is worth zero. We’re just keeping platforms running. Even in these difficult times, we’re working on what we’ve learnt and building intelligence on top of it," he said.
However, he added that at the consolidated level, Think & Learn would have about Rs 5,500 crore in revenues. The employee count at all group companies together is around 25,000, while at Byju’s Learning app it is around 3,000.
He continued to maintain that the company is not fraudulent. "We've never done any intentional mistake; there's no fraud, and we've never syphoned any money. If there's fraud, founders will take money out, not put all their money in the company."
Raveendran proclaimed I am not running away. "If we had to run away, we’d have done that long back. It’s unfortunate that people think I ran away from India. I came to Dubai 4 years back, for personal reasons," he said, adding that it was due to his father's health issues.
"If investors and lenders are willing to wait, we’ll work with them. Just like we made money for all our Series A, B, etc. investors. Can you name a startup that has given out this much money in secondaries other than Flipkart without an IPO?" he said.
He said he will be back to India if his father's health permits. "I’ll be teaching soon. I’ll come to India and I’ll fill stadiums. We’re just waiting for the Supreme Court order. Any order, and I’ll start teaching. Even if we go down, we’ll teach," he said.
"I’m not disclosing the form and shape of the comeback. Based on the order that’s coming, it’s highly likely that we’ll come back by Think & Learn," he said.
Raveendran said it just takes one investor like Ranjan Pai to make a comeback. "We don’t have any financial creditors in India; the only debt is from the founders itself," he said.
