Think and Learn, the parent company of edtech major Byju's, has approved a rights issue to raise $200 million from existing investors. Starting today, this issue will continue for the next 30 days.  

According to a report by Moneycontrol, the issue will occur at a post-money valuation of $225 million, significantly lower than the company's last funding round at $22 billion.  

Founder Byju Raveendran and other existing investors are expected to participate, with a minimal subscription price, to encourage their involvement. 

Raveendran communicated the board's decision to raise funds through a rights issue mechanism in a letter sent to the shareholders. At present, the company's board comprises Raveendran, his co-founder and wife Divya Gokulnath, and his brother Riju Ravindran, after several other members quit their positions in recent months. 

In a statement cited by Inc42, he added,  “This rights issue is about those who care the most about Byju's stepping up as we continue to turn the company around. Along with being a founder, I am also the largest investor in the company. The funds raised will be exclusively utilised to clear immediate liabilities and meet operational requirements, while maintaining the current rights of our valued shareholders.” 

He further added, “I am also happy to share that BYJU’S is now less than a quarter away from achieving operational profitability, reflecting the effectiveness of our strategic initiatives and the resilience of our business model...We have made immense personal sacrifices for the sake of the company. We have spent our lives building this company and are fervent believers in its mission. Our enthusiasm and zeal continue unabated.". 

This move comes as Byju's faces financial challenges and increased scrutiny from its investors and government agencies. Raveendran reportedly mortgaged his houses to pay salaries while the company continued to battle various issues, including some of its lenders initiated legal insolvency processes.

Earlier this month, edtech said that its operating loss increased to Rs 6,679 crore in FY 2022. The company reported an operating loss (EBITDA) of Rs 4,143 crore in fiscal 2021, it added in a regulatory filing. The company's revenue more than doubled to Rs 5,298.43 crore in FY22 compared to Rs 2,428.39 crore in FY21. 

Citing sources, Moneycontrol reported that the company has reduced the monthly burn rate of its core business to Rs 50 crore and aims to achieve operational break-even in the next 2-3 months. Additionally, it plans to reconstitute the board after completing the FY23 audit.