May 26, 2022

Two sources familiar with the matter told gaming-updates that Edtech giant founder and CEO Baiju Ravindran funded his recent $400 million investment in Byju with loans raised from several international banks.

The startup announced Friday that it has raised $800 million in a new funding round, half of which was funded by its founder.

The revelation immediately caused a stir in the market as it is very rare to see a founder invest in a startup that is about to file for an IPO, let alone do so at a $22 billion valuation, Byju’s notes. case. Bijuu

What makes this even more interesting is that Ravendran, who taught students before founding Byju’s, hasn’t sold shares in the startup for years, so there are enough liquidated entities to pull off such a deal. Destiny can be made .

The source said that Ravindran took out a loan on “very favorable terms.” Two sources said he pledged his existing shares in Byju’s to take advantage of the loans. Now he and his family own about 25% of the startup. The source said that the founder’s share has the same rights as other investors in a startup. Both sources requested anonymity when discussing personal matters.

A spokesperson for Byju declined to comment on Monday.

If this deal structure seems similar, it’s because Oyo founder Riteish Agarwal made a similar investment in his startup three years ago. But unlike Agarwal’s investment, Ravindran’s loan is not secured by a third party. (SoftBank was delighted with Agarwal’s personal loan.)

If all goes according to plan, Ravindran will be able to repay the loan within 15 minutes.

Byju’s has several conditions to explore the IPO. One source said the startup’s board has yet to decide which financier to approach for a reverse merger with US-registered SPAC. The source said he plans to compile lists in both India and the US, but the lists are likely to be in place for at least six months. (The IPO announcement could have happened much earlier.)

The startup hopes to raise $4 billion in an IPO. One source warned that it could raise up to $1 billion in a pre-IPO round, warning that the terms and schedule were not final.

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