Byju’s founder took loan to invest $400 million in edtech giant

Byju Raveendran, founder and chief executive of the eponymous edtech giant, has financed his recent $400 million investment in Byju through a debt he raised from multiple international banks.

The startup said on Friday that it has raised $800 million in a new financing round, half of which it said was bankrolled by the founder.

It is very rare to see a founder invest in a startup that is about to file for an IPO, let alone do that at a $22 billion valuation, as it is the case with Byju.

Raveendran, the founder of Byju, has not sold any of his shares in the startup in several years to build his personal wealth large enough to carry such a deal.

A source said that Raveendran took a very favorable loan. Two sources said that he put 2% of Byju's shares as security for the loan. His and his family's shares in the startup have gone up from 23% to 25%. The founder's stake in the startup is the same as that of other investors, one source said. Both sources requested anonymity.

A spokeswoman for Byju refused to comment Monday.

Three years ago, Oyo founder Ritesh Agarwal made a similar investment in his own startup. Raveendran's loan is not backed by any third party. SoftBank was on the hook for the loan.

Raveendran should be able to pay off his loan in quarters.

There are multiple termsheets to explore an initial public offering. The board of the startup has yet to make a decision on which backer it wants to go with for the US listing, one of the sources said. An announcement about the IPO could happen very soon.

The startup wants to raise as much as $4 billion from the IPO. One of the sources said that it could raise as much as $1 billion in a pre-IPO round, cautioning that terms and planning are not final.