Interview Preparation

Prosus, a large investor in Byju’s, has put on record its disappointment in the edtech giant’s governance and reporting practices, a month after all key investors leave home board. Prosus, one of India’s most prolific investors, said in a statement on Tuesday that Byju’s “governance and reporting structures were not sufficiently evolved for a company of that scale” and that it “disregarded the advice and recommendations” of Prosus’s director despite repeated attempts.

Prosus, the largest outside investor in the Bangalore-based startup, said its director, Russell Dreisenstock, resigned from Byju’s board after it became clear he “could not fulfill his fiduciary duty to serve the long-term interests of the company and its shareholders.”

Byju’s, which in $22 billion valuation is India’s most valuable startup, had previously downplayed the reason Sequoia India, Prosus and Chan Zuckerberg Initiative members had resigned from the startup’s board, saying the directors “had to vacate” the board because their shareholding fell below the minimum threshold set out in the shareholding agreement.

Statement below from Prosus:

BYJU’S has grown considerably since our first investment in 2018, but over time its reporting and governance structures have not evolved enough for a company of that scale. Despite our Director’s repeated efforts, BYJU’S executive leadership regularly disregarded advice and recommendations related to strategic, operational, legal and corporate governance matters. The decision for our Director to resign from the BYJU Board was made after it became clear that he was unable to fulfill his fiduciary duty to serve the long-term interests of the Company and its shareholders.

BYJU’S is located at the intersection of India and Education, two very important and strategic investment areas for Prosus. Although we no longer have a representative on the company board, we continue to believe in the potential of BYJU’S and its role in revolutionizing access to quality education in India and around the world. As a shareholder, Prosus will continue to enforce its rights, collaborating with other shareholders and government authorities to safeguard the long-term interests of the Company and its shareholders.

Trouble is piling up at Byju’s. Deloitte Global Auditor too he left the startup last monthsaying it had received “no communication” from Byju about the status of “audit readiness of the financial statements and underlying books and records for the year ended March 31, 2022.”

Byju’s, which delayed its plans to go public, has spent more than $2.5 billion in recent years to aggressively expand globally, in a move that has unnerved some of its investors, according to people familiar with the matter.

Tuesday’s scathing statement from Prosus is remarkable for many reasons. Prosus is one of Byju’s early backers and has never sold any of his shares in the company. The Netherlands-based investment group, which has also reduced the value of its stake in Byju’s in recent quarters, he said today that he has invested billions in India and remains a “long-standing and committed supporter” of Indian entrepreneurship.

“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 to hold ourselves and our investee companies to the highest standards of corporate governance and reporting,” it added in a written statement.