Why Reliance Retail wrote off its $200M investment in Dunzo
What's the story
Reliance Retail, the biggest backer of hyperlocal delivery start-up Dunzo, has written off its $200 million investment. The move comes as Dunzo continues to struggle financially and has exited the quick commerce space in the last two years, according to an Inc42 report. Reliance Retail is not involved in any talks to extend further funding or to acquire Dunzo in a distress sale.
Acquisition talks
Dunzo CEO seeks potential buyers
Reportedly, Dunzo's CEO and co-founder, Kabeer Biswas, is in talks with high net worth individuals and family offices for a potential acquisition deal. The proposed deal could value the start-up at around ₹300 crore (roughly $30 million). However, Reliance Retail has assured Biswas of its support in his efforts to save Dunzo but has expressed no interest in acquiring the company.
Past proposal
Reliance Retail's previous buyout offer
Earlier, Reliance Retail had proposed a buyout of Dunzo at a near unicorn valuation, which was rejected by Biswas. The company's interest faded with the rise of quick commerce start-ups and Dunzo's restricted expansion beyond a few cities. This disinterest was further reflected when senior executives from Reliance Retail resigned from Dunzo's board in 2023, along with representatives from other investors like Lightrock and Lightbox.
Valuation plunge
Dunzo's valuation drop and unsuccessful buyout discussions
If Dunzo is acquired for the proposed price of $30 million, it would mark a major fall from its previous valuation of $770 million during its last funding round. Biswas has also reportedly held unsuccessful talks with Flipkart, Swiggy, Tata Group, and Zomato for a potential buyout. Dunzo continues to operate in parts of Bengaluru but has ceased operations in other cities.
Information
Biswas reportedly close to quitting the company
Earlier this week, reports emerged that Biswas is nearing his departure from the company and has informed investors of his decision. The CEO plans to step down after overseeing any potential acquisition deal.
Financial woes
Dunzo's financial struggles and workforce reduction
Dunzo's financial woes have resulted in drastic cuts, unpaid vendor bills, and the exit of founders and key leaders. The company's losses tripled to ₹1,801 crore in FY23 from ₹464 crore in the previous fiscal. These financial woes also led to delayed salary payments for current and former employees as well as pending dues to vendors.