Reliance Retail, the largest shareholder in hyperlocal delivery startup Dunzo, has written off its $200 million investment in the company. According to sources close to the matter, Reliance is no longer in talks to inject fresh funds into Dunzo or acquire the troubled startup in a distress sale.
Dunzo is an Indian company that delivers fruits and vegetables, meat, pet supplies, food, and medicines in major cities. It also has a separate service to pick up and deliver packages within the same city. Dunzo currently provides its delivery services in eight Indian cities including Bengaluru, Delhi, Gurugram, Pune, Chennai, Jaipur, Mumbai and Hyderabad. The company also operates a bike taxi service in Gurgaon. Dunzo is headquartered in Bangalore and was founded in 2014 by Kabeer Biswas along with co-founders Ankur Agarwal, Dalvir Suri and Mukund Jha. Dalvir Suri left Dunzo on 3 October 2023, along with Mukund Jha.
Dunzo’s Struggles and Search for a Buyer
Dunzo, once a prominent player in the quick commerce segment, is now grappling with severe financial challenges. The startup’s co-founder and CEO, Kabeer Biswas, is reportedly in discussions with high-net-worth individuals and family offices for an acquisition deal valued at ₹300 crore ($25–$30 million). This valuation represents a massive drop from Dunzo’s peak valuation of $770 million during its last funding round in January 2022, when Reliance Retail invested $200 million.
Failed Acquisition Talks with Major Players
Biswas has also approached companies like Flipkart, Swiggy, Tata Group, and Zomato for a potential buyout, but none of these discussions have materialized. Recent reports suggest that Biswas plans to step down as CEO after securing an acquisition deal.
Leadership Exodus and Financial Woes
The financial instability at Dunzo has been marked by significant leadership changes. Reliance Retail executives Ashwin Khagiwala and Rajendra Kamath, along with other key investors such as Lightrock and Lightbox, stepped down from Dunzo’s board in 2023.
The company’s losses widened drastically, increasing over threefold to ₹1,801 crore in FY23, compared to ₹464 crore in the previous fiscal year. This financial distress has led to delays in salary payments for employees, unpaid vendor dues, and mounting debt estimated at ₹80 crore.
Dunzo’s Journey: From Promise to Peril
In 2022, Dunzo raised $240 million in a funding round led by Reliance Retail, marking Reliance’s largest investment in the Indian startup ecosystem. At the time, the partnership aimed to leverage Dunzo’s hyperlocal logistics expertise to support Reliance’s retail network and JioMart operations.
However, the startup struggled to scale its Dunzo Daily quick commerce service beyond Bengaluru, Mumbai, and Delhi, losing ground to competitors like Blinkit, Instamart, and Zepto. Dunzo’s attempt to transition from 15–20 minute deliveries to 60-minute deliveries to cut costs also failed to revive its fortunes.
Reliance Moves On
With Dunzo faltering, Reliance Retail appears to be exploring quick commerce opportunities independently through JioMart. Dunzo’s decline underscores the challenges of operating in the hyper-competitive quick commerce market, where well-funded players like Zepto have thrived.
Future Uncertain
Despite securing $6.2 million in debt funding recently, Dunzo’s future hinges on finding a buyer and clearing its outstanding dues. The outcome of Biswas’s ongoing acquisition talks will likely determine whether the company can salvage its operations or fade away as another casualty of the quick commerce wars.
