Bengaluru-based hyperlocal delivery startup Dunzo is reportedly in advanced discussions to secure $100 million in its Series G funding round. Sources reveal that the startup is engaging with its existing investors, including Lightbox and Lightrock, for the upcoming capital infusion. However, notable absence in this round is Reliance Retail.
Insiders suggest that the funding amount for the Series G round could range from $80 million to $100 million, primarily comprising equity investment with a possible minor debt component. The injection of funds would bring relief to Dunzo, which has been grappling with financial constraints. The company has faced challenges such as delayed employee salaries and legal notices from vendors due to outstanding payments.
Dunzo has been undergoing a significant business model transformation since October of the previous year. The startup has been downsizing its dark stores across India to reduce operational costs, instead opting to establish partnerships with retail outlets to offer logistics services through a revenue-sharing arrangement.
While Dunzo’s response to the funding rumors is awaited, industry insiders believe that this fresh infusion of capital will be pivotal for the startup. The funds are anticipated to be used to stabilize employee compensation, clear vendor dues, achieve profitability over the next six to nine months, expand business operations, and strengthen the delivery network.
Earlier this year, Dunzo secured around $45 million through convertible notes from Google and Reliance Retail. Despite these efforts, the startup made the tough decision to lay off approximately 300 employees, constituting about 30% of its workforce, in April due to mounting losses and strategic changes in its business approach.
Financial figures for the fiscal year 2021-22 reveal that Dunzo’s net loss more than doubled to INR 464 crore from INR 229 crore in the previous fiscal year. However, operating revenue witnessed a 2.1-fold growth, reaching INR 54.3 crore. Total expenses also saw a doubling, amounting to INR 531.7 crore. The company significantly increased advertising and promotional expenses, which rose nearly sixfold from INR 11 crore to INR 64.4 crore.
The impending equity funding round marks Dunzo’s journey back to the investment landscape after almost 19 months since its Series F funding round, which garnered $240 million. In the Series F round, Reliance Retail Ventures Limited (RRVL) led the investment, securing a 25.8% stake in the startup. With an earlier valuation of $775 million, Dunzo’s worth in the new funding round remains undisclosed.
The developments within Dunzo’s funding efforts come in a time of heightened activity in the quick-commerce sector. Another player, Zepto, is reportedly on the verge of reaching unicorn status with a $150 million Series E funding round, valuing the startup at $1.3 billion.