Byju’S $800 Million Fundraise Off-Track As Sumeru Venture Payment Goes Missing: Report

At a time when the macroeconomic headwinds have slowed the pace of deal-making in the startup ecosystem, edtech giant BYJU’s had announced a mega $800 million fundraise earlier this year, in March. While founder Byju Raveendran had invested $400 million, the rest came from other investors, including Sumeru Ventures, Vitruvian Partners and BlackRock.

However, a Morning Context report published on Monday morning has revealed that the money from Los Angeles-based Sumeru Ventures has not come in yet.

BYJU’s $800 million fundraise off-track?

The company’s filings with the Union Ministry of Corporate Affairs show that 16,031 Series F preference shares were allotted to Vitruvian Partners on March 29 for Rs 571 crore. There has been no such filing in the case of either Sumeru Ventures or BlackRock since the March announcement. This means BYJU’s is looking at a Rs 2,500 crore sized hole in the funding, the report added.

“It also seemed like Sumeru was representing BlackRock, when in reality it wasn’t. All of this has cast a shadow on the deal,” one of the sources told Morning Context.

As per the report, things came to light when one of the investors initiated a probe by corporate investigation and risk consulting firm Kroll, which found “serious discrepancies with Sumeru Ventures, which has derailed the entire investment”.

Morning Context said it had reached out to 18 people, including entrepreneurs, venture capitalists and industry experts from India and the US, to find out more about Sumeru Ventures, but no one had heard about either the fund or its managing directors.

Red Flags and Setback for BYJU’s

Highlighting another red flag around Sumeru, the Morning Context noted an indelible link with spiritual guru Ravi Shankar and his The Art of Living Foundation on the VC firm’s website.

Moreover, one of the Managing Directors of Sumeru Ventures, Saumen Chakraborty too has a Ravi Shankar connection. Chaurasia was also the CEO of The Art of Living Digital and joined Sumeru Ventures in February 2019. There are multiple links with The Art of Living Foundation and no history of investments or managing funds, the Morning Context report added.

The derailment of the March funding round could be a massive setback for the company as it is reportedly in talks to raise $1 billion in acquisition debt financing.

When CNBC-TV18 reached out to BYJU’s, the edtech giant refused to comment specifically on the Morning Context story. A source in the company said, “We are not commenting on this… You can reach out to Sumeru or Kroll.”

Delayed Payments, Layoffs: The Hits Keep Coming

“Our payments to Aakash are closed and the audited financial results are going to be announced in the next 10 days,” BYJU’s said in a statement to CNBC-TV18.

Moneycontrol had reported earlier that Deloitte, the edtech giant’s auditor, has not signed off on its results and so BYJU’s could take a few more weeks to file its financial results with the Ministry of Corporate Affairs (MCA). Several media reports had alleged that BYJU’s had delayed payments to shareholders of Aakash Educational Services for an approximately $1 billion acquisition that the edtech unicorn made last year.

BYJU’s had said that the company had agreed mutually with Aakash to extend the payments to August this year. “Our fundraising efforts are on track and majority of the 800 million (dollars) has been already received. The balance is also expected soon,” BYJU’s told CNBC-TV18.

Amidst all this, BYJU’s is pushing hard with its US expansion with an offer of $1 billion for the NASDAQ-listed edtech company 2U, according to a Bloomberg report. Earlier, there were reports that BYJU’s was eyeing the NYSE-listed Chegg.