 "Dunzo seeks to raise $35 mn in rights issue at a $200 mn valuation")
Delivery firm Dunzo is seeking permission from its board to raise up to $35 million through a rights issue. Meanwhile, according to a report by The Economic Times (ET), some of its investors suggest that the valuation of the troubled startup should be cut to about $200 million for the crucial financing round.
Sources informed ET that while some of the existing investors have committed around $10-15 million in capital at the reduced valuation, the firm's board has yet to approve the proposal.
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To secure the much-needed funding, Kabeer Biswas, Dunzo's founder and chief executive officer, is expected to seek board permission, including major shareholders like Reliance Retail and Google.
One investor told The Economic Times that the current commitment for funding is based on a $200 million valuation, which is the blended average for most investors in the firm before it was valued at close to $800 million. The capital is being committed as Dunzo is transitioning to become a business-to-business (B2B) company, focusing on delivery for business customers. All parties investing in the capital round must agree on the new valuation, the investor added.
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The struggling startup has significantly scaled back its quick-commerce operations to conserve cash over the past year. It has ceased operating its dark stores and now offers services through third-party grocery stores. According to sources, the future of its consumer business appears bleak, and discussions have centred on the possibility of shutting it down. The company has proposed that 70-80 per cent of its business will come through Dunzo Merchant Services, which could become its sole remaining operation.