A month after all the major investors left the startup’s board, Prosus, one of Byju’s largest investors, highlighted its dissatisfaction with the edtech giant’s reporting and governance methods on Tuesday. Byju’s reporting and governance systems “did not evolve sufficiently for a company of that scale,” according to a damning statement released by Prosus on Tuesday. In addition, despite repeated requests, the Indian company “disregarded advice and recommendations” from Prosus’ director.
Russell Dreisenstock resigned from Byju’s board of directors, according to Prosus, the startup’s largest outside investor, when it became evident that “he was unable to fulfill his fiduciary duty” to serve the long-term interests of the company and its stakeholders.
The action comes after Chan Zuckerberg Initiative, Prosus, and Sequoia India, three of Byju’s most important investors, resigned from the startup’s board of directors last month. At the time, Byju’s, India’s most valued startup with a $22 billion valuation, downplayed the significance, stating that the directors “had to resign” from the board since their stake was below the minimal threshold outlined in the shareholder agreement.
At Byju’s, trouble is getting worse. worldwide auditor Last month, Deloitte also left the business, claiming that it had not received “any communication” from Byju’s regarding the readiness of the “audit financial statements and the underlying books and records for the year ended March 31 2022.”
According to people familiar with the subject, Byju’s, which has raised over $6 billion in total, has spent over $2.5 billion in recent years to aggressively expand overseas, which has alarmed some of its investors. As market conditions changed, the business was forced to postpone its planned IPO, lay off thousands of people, and look for alternative ways to cut costs.
Prosus’s caustic speech on Tuesday is noteworthy for several reasons. Prosus was one of the company’s first backers and has never sold any of its shares. The Netherlands-based investment firm, which has recently reduced the value of its interest in Byju’s, stated today that it has invested billions in India and is a “long-standing and committed supporter” of Indian business.
“While the companies and sectors we work with in India and around the world are high-growth and rapidly evolving, our stakeholders rightly expect us and our investee companies to hold ourselves and our investee companies to the highest standards of corporate governance and reporting,” it said in a written statement.
The statement continues:
BYJU’s has grown significantly since our first investment in 2018, but its reporting and governance procedures have not evolved sufficiently for a firm of that size. Despite our Director’s repeated efforts, executive leadership at BYJU’S routinely ignored advice and suggestions on strategic, operational, legal, and corporate governance issues. Our Director resigned from the Board of BYJU because it became evident that he was unable to fulfill his fiduciary duty to serve the long-term interests of the Company and its stakeholders.
BYJU’S is located at the crossroads of India and Education, two critical and crucial areas of investment for Prosus. We continue to believe in the potential of BYJU’s and its role in revolutionizing access to excellent education in India and around the world, despite the fact that we no longer have a presence on the Company’s Board of Directors. As a shareholder, Prosus will continue to exercise its rights, working with other shareholders and government officials to protect the Company’s and its stakeholders’ long-term interests.