Dunzo seeks $20 million additional investment from Reliance Retail

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Dunzo is seeking to raise an additional $20 million (roughly Rs. 165 crores) from its largest shareholder, Reliance Retail. According to a report before economic timesThere are currently ongoing discussions regarding the matter as the company reportedly failed to reach its $75 million financing target in April.

Reliance Retail acquired a 25.8 percent stake in Dunzo in January 2022 after investing $240 million in the startup. On the other hand, Google owns just under 20 percent of the shares. If the ongoing discussions are successful, Reliance Retail’s ownership in the startup is expected to increase as it considers additional investment.

This news comes after a series of layoffs and reported salary deferrals by the company.

As Business Standard reported earlierIn January, the company laid off three percent of its workforce (about 80 people). It also reduced the number of its darkroom stores by 50 percent because it was trying to turn a profit. In April, Dunzo raised $75 million through convertible notes and laid off another 30 percent of its staff (about 300 employees). At the time, CEO Kabir Biswas stated that the delivery platform was looking to “revamp” its business model.

Dunzo, which is backed by venture capital funds such as Blume Ventures and Lightbox, has shifted into a business (B2B) unit, Dunzo Merchant Services (DMS), in which Reliance Retail’s JioMart e-commerce arm is the largest shareholder. Dunzo aims to achieve profitability through the B2B segment, which requires less capital compared to Dunzo Daily.

DMS handles more than 30,000 orders per day, primarily for last-mile delivery services, in seven cities. Dunzo had plans to expand DMS to 15 cities but has now canceled those plans. DMS generates about 35 percent of Dunzo’s revenue and serves more than 25,000 merchants, most of them in the food industry.

Dunzo operates platforms for different categories such as medicines, groceries, pet supplies, and meat. The company generates revenue through commissions from merchants and delivery fees from users of the platform.

Dunzo currently has about 1,000 employees According to recent reports, the company has postponed the June salaries of about 500 employees, which is half of its number of employees. The report adds that the salaries of those above 75,000 rupees have been delayed.

according to E.T., The company has enough capital to maintain operations for about 8-10 months, but aims to cut costs significantly to extend its cash flow.

However, it is uncertain whether Reliance Retail has provided a clear answer yet. Furthermore, Dunzo is unable to approach other strategic investors due to Reliance’s presence.