Will Mukesh Ambani's Reliance Retail Save Dunzo's 'Sinking Ship'?

Quick-commerce startup Dunzo is reportedly seeking an additional $20 million (₹165 crore) investment from its largest shareholder, Reliance Retail, after falling short of its $75 million (₹615 crore) fundraising target.

What Happened? Reliance Retail’s presence as the major shareholder limits Dunzo’s options for tapping other strategic investors, sources told the Economic Times.

The company managed to raise only about $45 million (₹370 crore) in April, with only Reliance Retail and Google subscribing to the convertible notes, leading to a cash flow problem. Dunzo then deferred payment of June salaries above ₹75,000. Reliance Retail currently holds a 25.8% stake in Dunzo, and an additional investment would raise its stake in the startup.

See Also: Reliance May Be Close To Acquiring Alia Bhatt’s Kidswear Brand

Dunzo’s operations have faced challenges in recent months, leading to layoffs and downsizing of its dark stores. The company’s focus is now on the business-to-business unit, Dunzo Merchant Services (DMS), with JioMart from Reliance Retail being a significant contributor to DMS’s business.

Despite being a leader in pick-up-and-drop services, Dunzo faces tough competition in the quick commerce sector from rivals like Swiggy Instamart, Zomato’s Blinkit, BigBasket’s BB Now, and Zepto. The company is looking to increase cost-cutting measures to extend its cash runway and is reconsidering expansion plans for DMS operations.

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The uncertainty caused by the funding gap has affected employee morale, leading some to actively seek opportunities elsewhere, the sources told the business daily. "No one wants to be caught in the sinking ship … people are trying to jump ship before things get worse," one anonymous source told ET.

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Posted In: NewsFinancingStartupsDunzoReliance Retail