Delivery based startup, Dunzo seeks $150 million funding

Google backs Delivery based startup Dunzo.

Dunzo connects low-cost couriers to thousands of individual merchants which has gained rapid momentum among Indians by delivering items like groceries to parcels in traffic-clogged cities.

Dunzo Digital Private Ltd.,  aims to double the amount of capital it has raised after being backed by Google to extend its reach across the country, currently they are into eight Indian cities, they claim to generate a $1 billion revenue business in the next two years. They have already raised about $140 million to date and aim to tap investors for roughly another $150 million in 2021.

Dunzo CEO

“The expansion only really starts next year at full pace, so we’ll raise the capital this year, but it gets deployed only next year,” Kabeer Biswas, Dunzo’s 36-year-old chief executive officer, said in an interview. The company may expand to two more cities in 2021, then build toward a presence in 20 urban areas by mid-2023, he said. It’s also started offering 15-minute deliveries for a range of 2,000 commonly-sought-after items.

The delivery startup Dunzo was founded in 2014 and started out as a WhatsApp service, before becoming an app where customers typically pay about $6 per order.

Delivery Competition

Dunzo and other food delivery services have also seen Covid-19 drive competition as a second wave of infections sweeps India. Competing firms riding that boom include food-delivery app Swiggy, which said Monday that it’s raising $800 million.

The growing imposition of state-level restrictions “is a negative development for consumption in general” but web-based retail will likely get a “boost,” Jefferies analysts, including Vivek Maheshwari, wrote in a report Tuesday.

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Biswas said Dunzo doubled its annual sales in 2020 and expects the same rate of growth this year. Dunzo’s biggest operation in Bengaluru is now breaking even, he said.

However, the company is burning up to $2.5 million a month, though Biswas expects Dunzo to become profitable in 24 to 30 months. It may also look to expand in other markets in Asia in 2023, he said.

“You make 20 cents an order — the only way to make this business works is at scale,” he said. Still, “it’s important to be extremely disciplined in your geographical expansion, because you could suddenly start losing money everywhere.”