Dunzo likely to fire 200 employees in third round of layoff

This is the third round of layoffs in which about 200 employees are likely to be fired.

Dunzo, the Indian hyperlocal delivery startup, has faced funding challenges in recent months, as the current investment landscape has led to a correction in valuations for growth stage companies. Despite the tough funding climate, Dunzo has managed to secure $75 million in funding in April 2023, bringing its total raised capital to $497 million. The company’s last valuation stood at an impressive $757 million. Backed by prominent investors such as Google, Blume Ventures, Alteria Capital, and Lightrock, Dunzo has established itself as a key player in the hyperlocal delivery space since its founding in 2015.

One of the major stakeholders in Dunzo is Reliance Retail, holding a significant 25.6% stake in the company, followed closely by Google with an 18.53% stake. Dunzo faces competition from other players in the market, including Swiggy, Zepto, and Blinkit.

However, like many other startups in the current climate, Dunzo is finding it challenging to secure funding at the enterprise valuations seen in 2021. Anil Joshi, Managing Partner of Unicorn India Ventures, highlighted that while investments are still happening, the prevailing correction in valuations means that most growth stage companies are struggling to raise funds at higher valuations.

To overcome the funding hurdles, Dunzo must focus on optimizing its operations and reducing costs. The delivery company, like many others in the industry, currently operates at a negative margin, making it difficult to cover costs without a product-led model.

Joshi emphasized that Dunzo should explore a suitable costing model to charge consumers in a manner that allows them to bring down their burn rate. The need of the hour is to achieve cash breakeven, ensuring the company’s financial stability.

The delivery space in India remains highly competitive, and while the market offers significant opportunities for growth, companies like Dunzo must adapt their strategies to navigate the evolving funding landscape. By streamlining operations, optimizing costs, and aligning their business model with market demands, Dunzo can better position itself for sustained success in the hyperlocal delivery industry.

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