Reliance Retail is reportedly holding the key to Dunzo’s survival. According to a report in Economic Times, quoting sources, Dunzo’s future hangs by a thread as Reliance Retail has not yet committed to a proposed rights issue. Reliance Retail is Dunzo’s largest investor. As Dunzo CEO Kabeer Biswas has been trying to stitch together a fresh financing round, Mukesh Ambani-owned Reliance Retail’s participation and clearance for the cash infusion will be critical.
According to the report, there has been an impasse after several rounds of discussions that has left Dunzo’s other investors increasingly sceptical of the startup’s chances of survival in the absence of fresh funding soon, said multiple people briefed on the situation. The quick commerce startup needs funds urgently and is struggling to pay salaries of even the skeletal staff.
“Conversations between Reliance Retail and Dunzo have fallen through. The company desperately needs capital but there is no indication yet to Dunzo that Reliance, which owns at least 26%, is going to invest,” said one of the people quoted in the report.
Sources also told ET that CEO Biswas has been simultaneously trying to tap into alternative sources of capital, though efforts are yet to bear fruit.
Dues and salaries pending
Dunzo has been struggling to pay employees’ salaries since months now. Dues of several vendors too are said to be pending. ET reported on October 10 that all material payments from the company were being reviewed by the board and investors such as Reliance Retail.
Dunzo was last valued in January 2022, at close to $800 million, but is currently a pale shadow of its former self, in terms of scale. Before Reliance’s investment, Dunzo was valued at around $300 million. Dunzo posted a loss of about Rs 1,802 crore in FY23, nearly four times wider than Rs 464 crore in the previous year, even as revenue from operations expanded more than fourfold — from Rs 54.3 crore to Rs 226.6 crore. Total expenses jumped to Rs 2,054.4 crore in FY23, from Rs 531.7 crore in FY22.
Report also claims that amid several job cuts through 2023, Biswas had to commit to investors that Dunzo will have no more than 200 employees. This, too, may change if new capital doesn’t come to the company on time.
Even now, the cash-starved startup told employees that November salaries should be deposited “in a few days,” based on “assurance” from investors, even as it tries to close a bigger funding round.
According to the report, there has been an impasse after several rounds of discussions that has left Dunzo’s other investors increasingly sceptical of the startup’s chances of survival in the absence of fresh funding soon, said multiple people briefed on the situation. The quick commerce startup needs funds urgently and is struggling to pay salaries of even the skeletal staff.
“Conversations between Reliance Retail and Dunzo have fallen through. The company desperately needs capital but there is no indication yet to Dunzo that Reliance, which owns at least 26%, is going to invest,” said one of the people quoted in the report.
Sources also told ET that CEO Biswas has been simultaneously trying to tap into alternative sources of capital, though efforts are yet to bear fruit.
Dues and salaries pending
Dunzo has been struggling to pay employees’ salaries since months now. Dues of several vendors too are said to be pending. ET reported on October 10 that all material payments from the company were being reviewed by the board and investors such as Reliance Retail.
Dunzo was last valued in January 2022, at close to $800 million, but is currently a pale shadow of its former self, in terms of scale. Before Reliance’s investment, Dunzo was valued at around $300 million. Dunzo posted a loss of about Rs 1,802 crore in FY23, nearly four times wider than Rs 464 crore in the previous year, even as revenue from operations expanded more than fourfold — from Rs 54.3 crore to Rs 226.6 crore. Total expenses jumped to Rs 2,054.4 crore in FY23, from Rs 531.7 crore in FY22.
Report also claims that amid several job cuts through 2023, Biswas had to commit to investors that Dunzo will have no more than 200 employees. This, too, may change if new capital doesn’t come to the company on time.
Even now, the cash-starved startup told employees that November salaries should be deposited “in a few days,” based on “assurance” from investors, even as it tries to close a bigger funding round.