 "Dunzo")
Dunzo is seeking to raise an additional $20 million (about Rs 165 crore) from its largest shareholder, Reliance Retail. According to a report by the Economic Times, there are currently ongoing discussions regarding this as the company reportedly failed to reach its $75 million funding target back in April.
Reliance Retail picked up 25.8 per cent of Dunzo's shares back in January 2022 after investing $240 million into the startup. Google on the other hand holds just below 20 per cent shares. If the ongoing discussions are successful, Reliance Retail's ownership in the startup is expected to increase as they consider making an additional investment.
This news comes after a series of layoffs and reported salary deferrals by the company.
As Business Standard had earlier reported, in January the company had laid off three per cent of its workforce (around 80 people). It also reduced its dark store count by 50 per cent as it was trying to turn a profit. In April, Dunzo raised $75 million through convertible notes and laid off another 30 per cent of its staff (around 300 employees). At the time, CEO Kabeer Biswas stated that the delivery platform was looking to "revamp" its business model.
Dunzo, backed by venture capital funds like Blume Ventures and Lightbox, has shifted to the business-to-business (B2B) unit, Dunzo Merchant Services (DMS), where Reliance Retail's JioMart ecommerce arm is the largest contributor. Dunzo is aiming to achieve profitability through the B2B segment, which requires less capital compared to Dunzo Daily.
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DMS handles over 30,000 orders per day, primarily last-mile delivery services, in seven cities. Dunzo had plans to expand DMS to 15 cities but has now canceled those plans. DMS generates around 35 per cent of Dunzo's revenues and serves over 25,000 merchants, with a majority of them in the food industry.
Dunzo operates platforms for various categories such as medicines, groceries, pet supplies, and meat. The company earns revenue through commissions from merchants and delivery fees from platform users.
Dunzo currently has around 1,000 employees and according to recent reports, the company has deferred the June salary of around 500 employees, which would be half of its staff. The report adds that the salaries of those above Rs 75,000 have been delayed.
According to ET, the company has enough capital to sustain operations for about 8-10 months but is aiming to cut costs aggressively to extend its cash runway.
However, it is uncertain whether Reliance Retail has given a clear answer yet. Moreover, Dunzo is unable to approach other strategic investors because of Reliance's presence.
