Cash-strapped Dunzo cuts workforce to 50 as it searches frantically for capital

The Bengaluru-based firm is looking to claw back profits to pay off liabilities including salaries of current and former employees as well as vendor payments as it scouts for capital to survive, they added, requesting anonymity.

In May, Mint reported that Dunzo was in the final stages of closing a funding round of $22-25 million in a mix of equity and debt from a clutch of new and existing investors, attempting to “find safety for the company into perpetuity”.

However, the transaction is taking much longer to close as many potential investors remain wary of the company’s growth path, one of the two people said.

Dunzo’s co-founder and chief executive Kabeer Biswas declined to comment on queries sent by Mint.

In an email to employees on Friday, Dunzo said it would pay pending salaries, severance, leave encashment and other dues to affected staffers as soon as it receives funds. Mint has seen a copy of the email.

The company had also considered the option of entering other lines of businesses that complement its core merchants business, and have the ability to make money soon and are operationally light, the two persons added, adding that Dunzo was hopeful the business would turn around in September on the back of its business-to-business segment.

Mounting liabilities

Dunzo is yet to pay salaries including full and final settlements to several former employees. In September, Dunzo partnered with payroll servicing firm OneTap to disburse salaries for certain months.

“We are trying our best to end this transaction at the earliest. It’s a complicated one and has multiple hops. I am sorry for constantly saying sorry even. But given our current situation, few levers stay in our hands, and I apologise,” Biswas had said in an internal message to employees in May.

“I really do wish to reach a point, where we can stop with the daily/monthly anxieties around salary payments – and hoping the next fortnight allows us to wrap up everything, so that May is the last month of us having to manage this crisis,” the CEO added.

Also read | Cash-strapped Dunzo finally close to striking a “transaction” to settle its dues

Cash flow issues persist

Dunzo, which started as a concierge service and after multiple pivots now labels itself as a convenience platform, had in April told employees in an email that it was working towards achieving its “first full profitable year” in 2024-25. The company had also said it hoped to expand the team as it doubled down on certain categories starting July.

However, cash flow issues persist, according to the first person mentioned above.

Overall, Dunzo has raised nearly $470 million till date. Reliance Retail holds 25.8% of the firm, making it the single largest shareholder, followed by Google and venture investor Lightbox.

The startup introduced quick commerce under Dunzo Daily in 2021, making the most of a $240-million fundraise led by Reliance’s retail venture. However, it soon ran out of money given the cash-guzzling nature of the business.

Dunzo then increased focus on its merchant services business, called Dunzo for Business, as well as its customer-to-customer parcel delivery business to turn around its fortunes.

The company, which was on its path to becoming a unicorn, or a company with a valuation of at least $1 billion in 2022, reported a substantial net loss of ₹1,802 crore in FY23. As of January 2022, Dunzo was valued at about $775 million.

Also read | NCLT gives Dunzo two weeks to settle dues with Betterplace Safety Solutions