Trouble Mounts at Hyperlocal Delivery Startup
Dunzo, the Bengaluru-headquartered hyperlocal delivery startup, has informed its employees that it will not be able to meet the postponed deadline for their monthly wages. The company had previously pushed back the disbursement date from September 4 to the first week of October.
Background on Dunzo’s Financial Struggles
In an email to its employees, Dunzo acknowledged that ensuring timely payment is a top priority and assured them that efforts are being made to avoid further delays. The company has been struggling with cash flow issues, which have led to partial deferment of June payroll for some employees and delayed July and August salaries for all staff.
Recent Funding Rounds
Dunzo has raised nearly $500 million altogether and was last valued at $757 million, according to market intelligence firm Tracxn. The company has been looking to raise a large funding round for several quarters, with the goal of securing as much as $150 million earlier this year. However, it could only manage to secure about $45 million in a recent funding round, as reported by Indian news outlet Economic Times.
Comparison with Rival Zepto
Zepto, Dunzo’s younger competitor, has recently raised $200 million in a new funding round at a valuation of $1.4 billion. This significant injection of capital is likely to further exacerbate the financial struggles of Dunzo and other hyperlocal delivery startups operating in the instant grocery market.
Global Trends in Instant Grocery Delivery
The instant grocery delivery space is increasingly seeing consolidation across the globe, with numerous startups struggling to raise new funds amid a weakening economy. Zomato acquired the struggling 10-minute grocery delivery startup Blinkit in a $568.1 million all-stock deal last year, and Food delivery giant Swiggy has also slowed the growth of its instant grocery delivery business in recent quarters.
Dunzo’s Shift towards Business-to-Business Model
In response to these challenges, Dunzo is increasingly prioritizing its business-to-business offering. The company has shut more than half of all its so-called dark stores – warehouses dotting a city where firms store their inventories – in recent quarters.
Industry Analysis
The instant grocery delivery space is highly competitive, with numerous startups vying for market share. Dunzo’s financial struggles are likely to have far-reaching consequences for the company and its employees. The shift towards business-to-business model may help stabilize cash flow, but it remains to be seen whether this will be enough to turn around the company’s fortunes.
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About the Author
Manish Singh is a senior reporter at TechCrunch, covering India’s startup scene and venture capital investments. He also reports on global tech firms’ India play. Before joining TechCrunch in 2019, Singh wrote for about a dozen publications, including CNBC and VentureBeat.
Contact Information
You can reach Manish Singh at manish(at)techcrunch(dot)com.
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