StartupTalky

Tag: Dunzo Investment

  • The Dunzo App and Website are Down While Employees Leave

    The website and mobile app of Dunzo, a hyperlocal delivery startup, are unavailable due to continuous issues. The message “{“error”:”Something went wrong.”} appears on its website. The message “Something doesn’t seem right” appears on the mobile app. The app does not presently allow new users to sign in. The software has been unavailable to users in several parts of the nation for a few days. The app and the website are reportedly having some “migration issues,” according to a media report, even though Dunzo has not made any public statements on the matter.

    However, report further stated that the company might be going through a process called ‘App Migration’. The process of transferring software applications from one environment to another is known as app migration.

    More Bad News for Denzo

    All of Dunzo‘s staff have departed the startup, according to the media report. On January 9, a few workers also complained about their unpaid salary to the Bengaluru police station in Indira Nagar against cofounder Kabeer Biswas. According to the lawsuit, Dunzo has failed to pay the salaries of around 400 workers. According to various reports, Biswas is expected to speak with the investigating officer about the situation on January 14. Due to a lack of funds, Dunzo has repeatedly postponed staff salaries over the past 12 months. In addition to not paying salary for November 2024, it postponed paying salaries for June and July for several months.

    Due to financial difficulties, Dunzo let go of several employees in 2023 and 2024, and a small number of people left the firm to work for other companies. The most recent development occurs just days after Biswas left Dunzo. He was the sole cofounder still working for the startup. Biswas will join “Flipkart Minutes” to oversee the operations of the e-commerce giant’s rapid commerce division.

    Denzo Unable to Generate Investments

    According to reports, Dunzo has made purchase offers to Reliance Retail, Flipkart, PhonePe, and Swiggy. Additionally, Reliance Retail wrote off its $200 million investment in Dunzo, according to various media reports. When Dunzo was first established in 2014, it provided pick-and-drop services. In 2021, it switched to fast commerce, and in 2022, Reliance Retail provided $240 million in capital.

    In order to complete a settlement with Invoice Discounters, the company has asked the National Company Law Tribunal (NCLT) for more time. The underlying financial problems have not been addressed, even though this might provide a brief reprieve.

    Some media outlets claim that Dunzo’s attorney informed the tribunal that the parties are sincere in their pursuit of settlement negotiations and close to finishing the terms of the agreement. Please give them two weeks. In the meantime, the corporation has barely paid half of its debt, according to the creditor’s attorney, who is disputing these assertions. Investors exit, boardroom chaos, and significant leadership changes at Dunzo have further compounded the company’s problems. Concerns regarding the startup’s future have been raised by the departure of important board members, including those from significant backers LightBox and Reliance Retail. The leadership gap is made worse by the departure of co-founders Dalvir Suri and Mukund Jha.

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  • $200 Million Dunzo Investment Is Written Off by Reliance Retail

    According to many news sources, Reliance Retail, the biggest shareholder in the struggling hyperlocal firm Dunzo, has wiped off its $200 million investment in the business. Following the company’s liquidity crunch and withdrawal from rapid commerce during the last 24 months, Reliance is also not engaged in any discussions to invest in Dunzo or buy it in a distressed sale. Kabeer Biswas, the CEO and cofounder of Dunzo, is currently spearheading negotiations with family offices and wealthy individuals for an acquisition deal that would value the business at INR 300 Cr ($25–$30 million).

    Biswas has received assurances from Reliance that they will help him save Dunzo. However, they have no interest in purchasing Dunzo. Two to three years prior, Biswas had rejected their buyout bid, which sought to acquire the hyperlocal business at a valuation close to unicorn. However, according to a media report, Reliance had no interest in Dunzo at all as speedy commerce companies entered the market and Dunzo’s failure to expand beyond a few locations.

    Reliance Executives and Other Investors Stepping Down

    In 2023, key executives Ashwin Khagiwala and Rajendra Kamath of Reliance Retail, as well as representatives from Lightrock and Lightbox, among other investors, resigned from Dunzo‘s board. The rumoured $30 million price tag for the company’s acquisition would represent a huge decrease from the $770 million Dunzo demanded in its most recent investment round, when Reliance provided the funding. According to reports, Biswas has also discussed a buyout with Flipkart, Swiggy, Tata Group, and Zomato but has not been successful. According to sources, Dunzo has closed in other cities but is still active in some areas of Bengaluru. At the moment, the business continues to operate according to its previous strategy of linking internet customers with nearby merchants.

    According to reports earlier this week, Biswas has informed investors of his intention to leave the company. The CEO plans to leave after completing any possible acquisition agreement. Reliance Retail contributed $200 million to Dunzo’s $240 million fundraising round in January 2022. Reliance Retail made its biggest investment in the Indian startup scene with this venture. The acquisition of edtech firm Embibe for INR 1,340 Cr, Clovia for INR 950 Cr, and NetMeds for INR 620 Cr are some of Reliance Industries’ other noteworthy investments. It was considered a sort of strategic investment at the time. Reliance and Dunzo planned to collaborate, with the former facilitating hyperlocal logistics for JioMart and Reliance’s network of retail locations.

    The Reason for the Downfall

    By 2022, the quick commerce game had altered, even if Dunzo had made it through the busy cycle and hyperlocal boom of 2015. Dunzo’s model was feeling dated, and the quick commerce sector started sprawling its nexus. In an attempt to compete with Blinkit, Instamart, and Zepto, the business started Dunzo Daily, but it was unable to grow outside of Bengaluru, Mumbai, and Delhi. Although it is evident in retrospect that the $240 million investment was insufficient to capitalise on the swift business opportunity, Zepto’s explosive growth brought a third competitor to the market, joining Zomato’s Blinkit and Swiggy-owned Instamart. Just like Zepto, Dunzo was unable to take advantage of this chance. Reliance Retail wants to investigate the rapid commerce possibilities with JioMart in light of Dunzo’s issues. Additionally, Dunzo’s financial condition has deteriorated over the last two years, resulting in significant budget cuts, a long list of unpaid invoices to suppliers, and the departure of founders and important executives. 

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