Byju Raveendran likens current crisis to war on multiple fronts, says true entrepreneur is a war leader
In a leadership huddle, CEO Arjun Mohan unveiled Byju’s 3.0, where he stressed the need to sell the right products to the right people without maximizing sales
Byju Raveendran, the founder of the embattled edtech unicorn Byju’s, rallied close to 50 of the firm’s top leaders, assuring them that this was a war on multiple fronts that they would ultimately win.
The meeting came amid a precarious liquidity crisis for the once-feted edtech, as it tries to raise money via multiple channels to keep operations going.
“A true entrepreneur is a war leader. What Byju’s is going through can only be seen as a war on multiple fronts against all odds,” he is said to have mentioned during the meeting. Further, he apologized for not being able to give much face time to the team lately.
“My regret is that I am letting down a wonderful team by not providing adequate capital,” he said.
He concluded by assuring that in a few months, Byju’s would begin the journey back to “the heights where it belongs.” He also gave updates on all the key issues that Byju’s has been embroiled in, from the term loan B issue to the ED notice, asset sales, and the current liquidity position.
Byju’s 3.0
While Byju’s has faced flak in the last few years for aggressively pushing its learning products to parents, its CEO Arjun Mohan emphasized the need to sell the right products to the right people without maximizing sales, an approach that he described as Byju’s 3.0
“Byju’s 1.0 was offline, while 2.0 was about tech-delivered context. Byju’s 3.0 will be about deep tech-driven personalization with the right approach and accountability to sales”, he said.
Byju’s challenges
Byju discussed five challenges that the company faced in 2023.
The first challenge is the litigation surrounding Term Loan B (TLB). He said this challenge should be resolved after the sale of Epic, which is a subsidiary of Byju’s in the US. That sale will also help manage the liquidity crunch the company faces now.
The second challenge is an ED notice received from the Enforcement Directorate. Byju clarified that the notice is related to procedural deficiencies under FEMA and that most of these issues have already been addressed.
The third challenge, according to Byju, is the closure of the ongoing FY23 statutory audit, which is on track to be completed soon.
The fourth challenge was the litigation surrounding the Davidson Kempner (DK) loan raised against Aakash Educational Services Limited (AESL), which has now been resolved with Ranjan Pai taking over the loan. He also said that Aakash is now set for a promising admissions season.
Finally, he spoke about the importance of finding ways to mitigate the impact of these cuts on the business and called on each team member to play a vital role in maintaining business momentum.
Byju’s needs Rs 500-600 crore in cash by March to settle outstanding employee dues, vendor payments, tax department obligations, and BCCI dues. The company is confident in raising this amount through asset sales or by pledging its holdings in Aakash or Think and Learn, a person familiar with the development said.
A second person added that Byju’s has been borrowing from family, friends, and other entrepreneurs in recent months to pay salaries and vendors. The company is falling short of Rs 60-70 crore every month, even as it has brought its costs down. For instance, its wage bill was higher than Rs 300 crore a year ago, and is currently Rs 130 crore now.
At the height of the funding and pandemic-led EdTech boom in 2020-2021, Byju’s aggressively raised funds and acquired companies. It made a record 22 acquisitions both in India and overseas, as it sought to expand from K-12 (kg to class 12) to categories such as test prep, higher learning, and coding. Byju is now counting on selling some of these assets to raise money and keep operations going at its core India EdTech business.
While Raveendran has been keeping investors informed about the company’s financial situation, Money control has learned that he is confident in weathering the liquidity crisis without their help. “There is no term sheet at this point and no question of Byju stepping aside. He has been putting in money in the last 8-9 months for the company to stay afloat,” a third person said.
Beginning of the trouble
Byju’s, which is India’s most-valued startup, has been under fire since the start of 2022 for a range of issues, including accounting irregularities, alleged mis-selling of courses, and mass layoffs.
The company has laid off thousands of employees in the last 12 months as it was hit by a double whammy of drying venture capital funding and slowing demand for online learning services. Since then, its investor board members have left too, citing differences with founder Byju Raveendran.
It has tried to recoup since then. Its early investor Ranjan Pai plowed in capital, set up an advisory council with veterans such as Mohandas Pai and Rajnish Kumar and elevated Arjun Mohan as CEO. It is also in talks to divest assets such as Great Learning and Epic.