The Economic Times daily newspaper is available online now.

    ETtech Recap: Decoding Dunzo’s deepening crisis in five stories


    Here’s a look at ETtech’s comprehensive coverage of the latest developments at the troubled Bengaluru-based company.

    Cash-strapped quick commerce startup DunzoETtech
    Reliance Retail-backed quick commerce startup Dunzo has seen founder-level exits, mass layoffs and salary delays in the past few months, underscoring the severe cash crunch at the company. A potential funding round is on the anvil, but that money, too, will come with strings attached.

    Here’s a look at ETtech’s comprehensive coverage of the latest developments at the troubled company.

    Elevate Your Tech Prowess with High-Value Skill Courses

    Offering CollegeCourseWebsite
    Indian School of BusinessISB Product ManagementVisit
    Indian School of BusinessISB Digital Marketing and AnalyticsVisit
    Indian School of BusinessISB Digital TransformationVisit
    Northwestern UniversityKellogg Post Graduate Certificate in Product ManagementVisit
    ETtech Exclusive: Dunzo cofounder Dalvir Suri to exit amid tough times | Dalvir Suri is leaving Dunzo following several weeks of crisis triggered by a severe cash crunch, according to multiple people aware of the matter. His departure comes after discussions on the issue with cofounder and chief executive Kabeer Biswas over the last couple of months at least, they added.

    Dunzo troublesETtech

    In recent months, Suri — who joined the Bengaluru startup as a cofounder six years ago — was closely involved in the company’s business-to-business delivery arm, Dunzo Merchant Services (DMS).

    Dunzo may get $30-35 million lifeline from Reliance, Google, others; more cost cuts on anvil across business | The embattled instant delivery startup may be able to secure only $30-35 million in new funding, and that, too, with riders, ET had reported.

    Reliance Retail, which owns nearly 26% in Dunzo, along with Google, Lightrock and DS Group, is among the existing investors likely to participate in the funding round, people aware of the development said, asking not to be named.

    dunzo funding GFXETtech

    Going forward, Dunzo will focus on its B2B vertical, Dunzo Merchant Services, which will account for 70-80% of its business, with the rest being consumer focused. Grocery delivery will happen only through third-party stores while it will continue pick-up-and-drop services.

    Dunzo has also cut more jobs, in what was its fourth round of layoffs since January. This is in line with the company’s plan to reduce fixed costs and pare the team size to 200 people.

    Dunzo further delays salaries, more layoffs likely as it vacates headquarters: ET reported on September 15 that Dunzo had informed employees pending salaries for June and July would be paid in November. The cash-strapped firm has delayed salaries on several occasions for these two months.

    The Bengaluru-based startup will be moving out of its current office in Bengaluru to a smaller office space as it has cut the size of its team significantly since the start of the year.

    Markdown detour slows fresh funds delivery to Dunzo: A disagreement among shareholders on the extent of reduction in Dunzo’s valuation became a roadblock in new financing for the troubled quick commerce startup.

    Reliance Retail was averse to the idea of slashing the valuation of the startup by nearly 50% in a fresh funding deal being stitched together by a set of existing investors, people aware of negotiations had told ET.

    For the telecom-to-retail conglomerate, a steep cut would mean a significant value erosion of its $200-million investment in Dunzo, made during a $240-million round in January 2022, they added.

    Dunzo holds talks with debt investors to rejig credit terms: ET reported on August 15 that Dunzo had held talks with its debt investors to restructure their credit terms so that the company could avail of some of the cash lying in the bank to clear pending dues to vendors and salary arrears to staff, sources aware of the discussions said.

    Dunzo’s business plummets amid severe cash crunchETtech

    Talks have been underway to finalise new terms, including payback timelines, people aware of the talks said.

    “There is cash in the company but debt obligations with cash flow are relatively stringent compared with equity investors. Dunzo had to take more debt as the April funding round took longer than expected and it needed capital to run operations,” one of the people mentioned above said.

    Read other important stories from our extensive coverage:
    ( Originally published on Jul 29, 2023 )
    Experience Your Economic Times Newspaper, The Digital Way!
    Stay on top of technology and startup news that matters. Subscribe to our daily newsletter for the latest and must-read tech news, delivered straight to your inbox.
    The Economic Times

    Stories you might be interested in