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

The arrangement is also expected to “find safety for the company into perpetuity", co-founder and chief executive Kabeer Biswas told employees on Friday in an internal communication, which Mint has seen. 

According to a person aware of the developments, Dunzo is in late-stage talks to raise $22 million-$25 million in a mix of equity and debt from a clutch of new and existing investors.

Dunzo did not confirm this, but Biswas in his message to employees said the company will be conducting reviews on 3 and 4 May to finalise the transaction, and that it had also negotiated its liabilities to settle for considerably lower amounts.

Dunzo, which is also backed by Google, is in the middle of a liquidity crisis that has over the past year forced it to pivot business models, delay salaries and vendor payments, and reduce its workforce.

Biswas, one of the two co-founders remaining at Dunzo, the other being Ankur Aggarwal, told employees the firm has requested investors for a bridge loan to settle salaries on priority.

“We are expecting closure on this by Monday, and all “current" - Mar & Apr salaries to be cleared as soon as that happens," Biswas wrote.

He expects pending March and April salaries to be cleared by next week, and other pending liabilities by 20-25 May, subject to closing of the transaction, as per the communication.

The loan towards clearing employee salaries could be as much as $100,000, said the person mentioned above, declining to be identified.

Dunzo did not immediately reply to Mint’s queries on the development.

Sorry for saying sorry

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 said in the internal message.

“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 in his message to employees.

Cash flow issues persist

Dunzo, which started as a concierge service and after multiple pivots now labels itself as a convenience platform, last month told employees in an email that it was working towards achieving its “first full profitable year" in FY25. 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 unnamed person mentioned earlier. 

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. 

Dunzo doubled its operating revenue in FY 2021-22 to ₹54.3 crore from ₹25.1 crore in the year prior, but its loss more than doubled to ₹465 crore from ₹225.7 crore, as per the company's regulatory filings. Dunzo hasn't yet filed its financials for FY23.