India’s Reliance Retail has decided not to pursue investment or acquisition in the hyperlocal delivery service Dunzo, Inc42 reported, citing sources with knowledge of the matter.
This decision comes as the startup faces financial challenges and scales back its quick commerce operations over the last two years.
Reliance Retail, which is the principal investor in Dunzo, has reportedly stepped away from discussions regarding additional funding or the possibility of acquiring the company amidst its cash shortfall.
Dunzo co-founder and CEO Kabeer Biswas is said to be spearheading negotiations with individuals and family offices to secure an acquisition that could value the startup at around Rs3bn ($25m to $30m).
One of the sources was quoted by Inc42 as saying: “Reliance has assured Biswas that they will be supporting him to salvage Dunzo. But they are not interested in buying Dunzo. They had made a buyout offer two-three years ago offering to buy the hyperlocal startup at a near unicorn valuation, which Biswas declined. But after quick commerce startups entered the industry and Dunzo’s inability to scale beyond a few cities, Reliance had absolutely no interest in Dunzo.”
In 2023, senior executives from Reliance Retail, Ashwin Khagiwala and Rajendra Kamath, along with representatives from other investors such as Lightrock and Lightbox, resigned from Dunzo’s board.
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The reported acquisition price of $30m would represent a dramatic decline from Dunzo’s $770m valuation during its previous funding round, when Reliance made $200m investment.
In January 2022, Dunzo raised $240m in funding with Reliance Retail contribution.
However, this capital infusion proved insufficient for capturing the quick commerce market segment as competitors like Zepto gained ground.
Facing financial difficulties, Dunzo has implemented cost-cutting measures and experienced an exodus of founders and key personnel.
The company’s losses tripled to Rs18.01bn in fiscal year 2023, leading to salary delays and unpaid vendor dues.
Although Dunzo secured $6.2m in debt financing and shifted focus to longer delivery windows to reduce expenses, it still faces considerable debts including vendor payments and taxes.
Dunzo continues to operate in select areas of Bengaluru city in India but has ceased operations in other cities, reverting to its original business model that connects local retailers with online shoppers.
