Dunzo lays off 150 employees, struggles to gain new capital

Delhi: Reliance Retail-backed Dunzo has laid off 150 employees, keeping only 50 members in its core supply and marketplace teams.

In its race to attain profitability to pay outstanding dues, pending salaries and vendor payments in order to raise fresh capital, the Bengaluru-based firm has joined the long list of financially strained businesses. 

Until last month, it was reported that the company was closing a $22-25 million funding round, but the deal fell through after investor apprehensions on growth prospects for Dunzo.

Dunzo has told its employees in a recent email that pending salary and severance will be paid once the funding comes in. The company has attempted to ramp up its offerings by adding complementary business lines to clock revenue while keeping its fingers crossed for a turnaround backed by its B2B segment.

Originally a concierge service, Dunzo pivoted into a convenience platform and aimed for break-even for the first time in 2024-25. Cash-flow troubles remain an issue.

So far, Dunzo has raised close to $470 million; its largest shareholder is Reliance Retail at 25.8%, followed by Google and Lightbox. 

Dunzo started the quick commerce business under Dunzo Daily in 2021, which is said to be a $240-million investment led by Reliance. The capital-intensive business soon ran into financial trouble. Dunzo subsequently refocused its energy on its merchant services and parcel delivery to shore up its finances.

Once well on its way to unicorn status, Dunzo reported a net loss of Rs 1,802 crore in FY23 and commanded a valuation of $775 million as of January 2022.