Quick commerce player Dunzo has raised $240 million in a new funding round led by Reliance Retail Ventures Limited. The round also saw participation from existing investors Lightbox, Lightrock, 3L Capital and Alteria Capital.
Dunzo was reportedly in talks with Reliance for the past three-four months for a potential deal. Several media reports also suggested that the company was in talks with Tata Group, Swiggy and Zomato for a new round. However, the talks didn’t materialise.
The deal with Reliance, on the other hand, can be considered a surprise, considering the Reliance Group’s track record of going for outright buys (Netmeds, Milkbasket) or relatively conservative valuations. Or even entering businesses that might be in some stress (the ongoing Future Retail buy). In the case of quick commerce, FOMO might have hit Reliance finally.
In this round, Reliance Retail has invested $200 million to acquire 25.8% stake in the Bengaluru-based firm on a fully diluted basis. This roughly takes the valuation of the Google-backed company to $775 million. As per Fintrackr’s estimates, it was valued at a little over $300 million in March last year.
According to Dunzo, the capital will be used to further Dunzo’s vision to be the largest quick commerce business in the country, enabling instant delivery of essentials from a network of micro warehouses while also expanding its B2B business vertical to enable logistics for local merchants in Indian cities.
As a part of the partnership, Dunzo will enable hyperlocal logistics for the retail stores operated by Reliance Retail and will also facilitate last-mile deliveries for JioMart’s merchant network.
Dunzo launched its instant delivery model ‘Dunzo Daily’ in Bengaluru earlier this year. Currently available across seven metro cities, the company will further expand its quick commerce business to 15 cities.
For the fiscal year ending on March 31, 2021, Dunzo saw its revenue from operations growing by 66.5% to Rs 45.8 crore from Rs 27.5 crore earned in FY20. During the period, the Kabeer Biswas-led company had managed to reduce its annual losses by 33.3% from Rs 338.4 crore in FY20 to Rs 225.7 crore in FY21.
The quick commerce space is hotting up in India where Zepto Zomato-backed BlinkIt (formerly Grofers), Swiggy and Ola are already scaling their business. Swiggy had recently committed to invest $700 million in Swiggy Instamart to focus on quick commerce whereas BlinkIt is reportedly seeking more investment from Zomato. Ten-minute grocery delivery startup Zepto also mopped up a $100 million round to expand its coverage across multiple cities in India.
