The survival of Byju's, formerly India's most valuable startup and the face of the community, is in jeopardy. The business, which is based in Bengaluru, and its investors are at odds over a rights issue that the latter brought up in late January after a year-long effort to secure capital.

By granting shareholders the option to buy more shares at a discount in proportion to their present holding, rights issues enable businesses to acquire cash. Investors who choose not to participate in the rights issue run the danger of having their Byju's ownership diluted to nearly nothing.

Prosus, Peak XV, and the Chan Zuckerberg Initiative, three investors who chose not to take part in the rights issue, are presently engaged in a legal dispute to have Raveendran fired from the company and have the $200 million raised through the rights issue declared invalid. Earlier this year, the investors filed a case with an Indian corporate court, and the judge directed Byju's to transfer the $200 million to an escrow account until the issues are settled.

TechCrunch has obtained a copy of an email sent by Raveendran to shareholders on Friday morning, in which he stated that the board of the startup is considering offering the money to unhappy investors despite their "uncalled for legal actions" and "animosity" toward the company.

Additionally, Raveendran told the shareholders that the company has already gotten more than half of the votes needed to raise its authorized capital and implement the $200 million rights issue, which has been fully subscribed. At its extraordinary general meeting on Friday, Byju's tried to approve a resolution about the rights issue. The two parties are scheduled to appear before the Indian business court once more on April 4, but the outcome of the rights issue won't be known until April 6.

Despite significant expense reductions, Byju's is facing an impending deadline. The money collected from the rights issue is necessary for Byju's to continue operating its business. Initiating future fundraising attempts and preserving the company's financial health also depend on resolving the ongoing disagreement with investors.

In the email sent on Friday, Raveendran stated, "I have always built Byju's with a spirit of equality and equity, and it has never been my intention to leave any investor behind, regardless of their shareholding size." Since the company's founding, my goal has been to guide everyone through each milestone as we go forward. And I've always believed that by working together, we can conquer our obstacles.

Due to Byju's governance procedures, Prosus, Peak XV, and Chan Zuckerberg Initiative abruptly withdrew from the board last year, and Deloitte terminated the startup's account. Byju's did not “evolve sufficiently for a company of that scale,” according to Prosus, which also claimed that the Indian company “disregarded advice and recommendations” from its backers.

As a result of its ambitious expansion plan during the pandemic, Byju's is currently suffering. In just two years, the startup—which by early March 2022 had reached a valuation of $22 billion—spent more than $2.5 billion acquiring almost a dozen firms worldwide. The company's aspirations to go public at a valuation of over $40 billion were derailed by the sharp shift in market opinion that followed Russia's invasion of Ukraine.

For his part, Raveendran has acknowledged that he made "mistakes" and is asking his supporters to give him another chance to go in the right direction. He stated on Friday, "Even my detractors understand that I have put everything—and even more—into this business." Thus, I'm hoping you'll recognize the benefits of sticking with Byju's with the same mindset that brought you along for the ride.