- By Vaamanaa Sethi
- Tue, 18 Jul 2023 01:30 PM (IST)
- Source:JND
Ecommerce platform Dunzo is seeking additional Rs 165 crore ($20 million) from Reliance Retail, which is its largest shareholder. The reports circulated after the cash-strapped quick commerce startup fell short of its target to raise $75 million by offering convertible notes, as per a report by The Economic Times.
Reliance Retail, which owns 25.8% stake in Dunzo, and Google, which has less than 20% shareholding, were the only two investors who subscribed to the convertible notes and this had caused adverse cash flow situation in the company, sources were quoted as saying by ET.
The additional funding by Reliance Retail will lead to an increase from 25% in shareholding in the e-commerce startup.
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According to the report, Dunzo had deferred payment of June salaries above Rs 75,000, which was described as “a cash-flow issue” during a town hall with employees by founder and chief executive Kabeer Biswas.
“They need more cash and have held discussions with Reliance Retail to invest around $20 million. It is not clear if Reliance Retail has given any clear answer to that yet. Dunzo can’t really tap any other strategic investors because of Reliance’s presence as well,” sources were quoted as saying by ET.
Dunzo had an annual revenue rate of around $300 million till April but reportedly declined significantly. Furthermore, the company has the capital to run operations for around 8-10 months and is relentlessly looking for ways to cut costs and increase its cash runway, the report said.
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Dunzo also downsized its Dunzo Daily grocery quick-delivery services, shut down half of its dark stores and sacked over 300 jobs.
“You will never see a dark store in Indiranagar (a high-order-density location in Bengaluru) getting shut, but overall they have reduced their own dark stores by 70% now as the focus is to hit operating profitability,” the source said.
As per the report, the company has also shifted its focus to business-to-business unit, which is Dunzo Merchant Services (DMS). Reliance Retail’s ecommerce arm JioMart is the largest contributor to DMS, accounting for more than 40% of the business.
“CEO (Biswas) has mentioned it internally as well that focus will be on B2B as that will not require the kind of capital needed to sustain Dunzo Daily — where its rivals are still expanding albeit at a much slower space than before,” another source was quoted as saying by ET.