Dutch investor Prosus slammed India’s troubled edtech titan Byju’s for governance failures and repeatedly ignoring its advice as investor disaffection with one of the country’s most valuable startups gained momentum.
The withering attack on Bengalaru-based Byju’s from one of its biggest investors came in a statement posted by Prosus on its website today. Auditor Deloitte had quit the company last month along with directors from Prosus, Sequoia India, and Chan Zuckerberg Initiative.
“Byju’s grew considerably since our first investment in 2018, but, over time, its reporting and governance structures did not evolve sufficiently for a company of that scale,’’ said Prosus, which holds a 9.6% stake in the company. “Despite repeated efforts from our director, executive leadership at Byju’s regularly disregarded advice and recommendations relating to strategic, operational, legal, and corporate governance matters.’’
It added that its representative on Byju’s board, Russell Dreisenstock, had stepped down last month because “he was unable to fulfil his fiduciary duty.’’
Byju’s 150 Million Students
Byju’s is a one-time darling of investors that says it has 150 million students around the world. It was founded in 2011 with a mission to make high-quality learning accessible to students everywhere.
“We have noted the observations of our valued investors,” Byju’s said in a statement, TechCrunch reported. “We have updated our shareholders about definitive steps taken to improve corporate governance and financial reporting.”
Prosus, which says it’s one of the largest tech investors in the world with revenues of $5.76 billion in fiscal 2023, slashed its valuation of Byju’s by three quarters to just $5.1 billion last month, from $22 billion a year earlier. Deloitte also stood down as Byju’s auditor last month, citing “long-delayed’’ financial reports that it said hampered its ability to perform its duties.
The company plans to file audited earnings for 2022 by September and 2023 results by December, Reuters reported last month, citing a person with direct knowledge of the matter.
India’s criminal investigation agency conducted searches of three properties belonging to the edtech giant and its founder, Byju Raveendran, in late April and said it seized ”incriminating” documents.
Believing in Byju’s Potential
Despite its scathing attack on the company, Prosus said it still believes in Byju’s potential, adding that it sits at the intersection of two important strategic areas: India and education.
“Although we no longer have a representative serving on the board of the company, we continue to believe in the potential of Byju’s and its role in revolutionising access to quality education in India and around the world,’’ it said. “Prosus will continue to assert its rights, collaborating with other shareholders and government authorities to safeguard the long-term interests of the company and its stakeholders.’’
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