Byju’s has closed a financing round of $250 million from its existing investors, including Qatar Investment Authority (QIA), which led the round with over $100 million. It includes the sale of secondary shares by existing investors of the edtech firm.
The primary fundraise was executed at its previous valuation of $22 billion while the secondary stake sale took place at a discounted price, said sources in the know. The deal, however, involves special liquidation preferences that have been handed out to these investors, making it different from a pure-play equity funding round.
Byju’s has used the capital to pay off pending dues to global private investment firm Blackstone incurred during its $950 million acquisition of Aakash Institute in April 2021.
The Bengaluru-headquartered company, which continues to face overall scrutiny of its financials and business model, is in talks to raise $500 million more through convertible notes from new and existing investors as a part of its pre-IPO funding, according to people aware of the matter. The pricing discount for these investors will be applicable when Byju’s goes for an IPO
A convertible note is a form of short-term debt that converts into equity, typically during a future financing round, or an IPO. It requires no valuation to be ascribed to a startup immediately, something that Byju’s and other highly valued tech firms are opting for to avoid a cut in their value.
The investors participating in the convertible notes round are expected to snag a 20% discount on the company’s share price and every six months that discount will keep going up.