Investor Exodus, Prosus Joins Key Backers in Resigning From Byju's Board
Prosus Takes a Stand, Byju's Governance and Reporting Practices Under Scrutiny
25 July 2023
Byju's faces a crisis as major investor Prosus expresses deep disappointment in reporting and governance practices.
All key investors, including Sequoia India and Chan Zuckerberg Initiative, resigned from Byju's board, intensifying the situation.
The departure of Prosus' director and Deloitte as the auditor adds to Byju's challenges, raising concerns about its leadership decisions.
Byju's, the Indian edtech giant and one of the country's most valuable startups, is facing a mounting crisis as its major investor, Prosus, has expressed deep disappointment in the company's reporting and governance practices. The situation escalated when all the key investors, including Sequoia India and Chan Zuckerberg Initiative, resigned from the startup's board a month ago. In a scathing statement, Prosus criticized Byju's for its failure to evolve its reporting and governance structures to meet the demands of its scale and disregarding valuable advice from its director.
The resignation of Prosus' director, Russell Dreisenstock, added to the turmoil as he cited his inability to fulfill his fiduciary duty to serve the long-term interests of the company and its stakeholders. This move has put Byju's under further scrutiny and raises questions about its leadership decisions. Moreover, the recent departure of Deloitte as the statutory auditor due to delayed financial statements compounds the company's challenges.
Byju's, which has raised an impressive $6 billion in total funding, aggressively expanded globally, spending over $2.5 billion in recent years. However, this expansion has sparked concerns among some investors. The startup had to postpone its listing plans, lay off thousands of employees, and search for cost-cutting measures as market conditions changed.
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Prosus' statement is particularly remarkable, given its status as one of the earliest and long-standing backers of Byju's, having never sold any of its shares in the company. Despite expressing disappointment, Prosus remains committed to Indian entrepreneurship and believes in the potential of the startup.
While Byju's revolutionized access to quality education in India and beyond, it appears that its reporting and governance structures did not keep pace with its growth. The departure of key investors from the board and auditor resignations have raised concerns among stakeholders, and the startup's future remains uncertain.
With Byju's facing challenges on multiple fronts, the education unicorn must take definitive steps to address corporate governance issues and improve its financial reporting. The company's pivotal role in transforming education in India should not be overshadowed by these setbacks. It remains to be seen how Byju's will navigate these troubled waters and restore confidence among its investors and stakeholders alike.