The company was expected to get USD 22-25 million from new and existing investors in equity and debt, but the deal was closed
Dunzo, the delivery service app backed by Mukesh Ambani’s investment, has fired 75% of its employees, leaving just 50 people in the supply and marketplace departments. This extreme action is due to the severe financial problems that the company is facing, such as unpaid wages to workers and suppliers.
Dunzo, which was once estimated at USD 775 million, has not been able to raise important capital. In May 2024 the company was expected to get USD 22-25 million from new and existing investors in equity and debt, but the deal was closed. Even though early in July, the company’s management promised that the funding deal was near, the transaction never happened, which only worsened the company’s financial situation.
Dunzo said it would clear all pending wages, termination benefits, leave salaries, and other emoluments once it gets the required capital.
Dunzo had received a funding of USD 200 million in 2023 from Mukesh Ambani, who bought about 25.8% of the stake in the company. But, here lies the problem, Dunzo has been unable to stabilize its finances despite investing so much in it.
Google, which has also been very active in the Indian startups with 20% stakes, will be observing these two events keenly. The fact that Dunzo could not raise capital even with such support shows that challenges of raising capital for startups are well alive in India.
Dunzo was started in July 2014 by Kabeer Biswas and the company has been providing fruits, vegetables, supplies, food ingredients and medicines on demand in major cities. However, the company has faced some issues recently, for instance, it suffered a data breach in June 2019 that affected about 3. 5 million users.
The dismissals, though, are indicative of the problems that Indian startups have been experiencing in their attempt to find sustainable sources of funding and, in the process, achieve sustainable business models.
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 "This Mukesh Ambani-backed company lays off 75% of its workforce, once valued at USD 775 million, now…")
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