Beleaguered Dunzo's CEO Kabeer Biswas is expected to rally for this clearance, liaising with major shareholders such as Reliance Retail and Google. While a few existing investors are ready to invest $10-12 million, the board is yet to give the final nod
Amidst the cash crunch crisis, Dunzo, a homegrown quick commerce startup is seeking final board approval to raise up to USD 35 million through a rights issue at a reduced valuation, a media report said.
The funding will slash the valuation of the beleaguered startup to about USD 200 million, which is just one-fourth of its peak value of USD 800 million, as per media reports.
Dunzo Troubles Worsen
A few of the existing investors have committed around USD 10-15 million in capital at the reduced valuation, the report added. The company’s board has not yet cleared the proposal. Dunzo founder and CEO Kabeer Biswas is likely to seek clearance from the board, including top shareholders like Reliance Retail, Google and others.
It was earlier reported that amid a cash crunch in the crisis-ridden hyper local delivery startup, its co-founder Dalvir Suri will step down from his position. The company will also undergo an organisation-wide restructuring from this quarter.
The exit comes at a time when Dunzo is struggling to generate funds and is trying all sorts of measures to cut its spending.
On 3 August, shortly after Ashwin Khasgiwala, Group Chief Of Business Operations at Reliance Retails and Rajendra Kamath, Finance Head at Reliance Retail, walked out from the company, two board members resigned from the board. Reliance Retail is the largest shareholder in Dunzo with a stake of nearly 26 per cent.
Vaidehi Ravindran, a partner at Lightrock India, left the board on 21 August. Co-founder Dalvir Suri also exited the board on 29 August. Moreover, Dunzo Co-founder and CTO, Mukund Jha, left the board on 1 September. Jha and CEO, Kabeer Biswas, do not own any direct shares in the company. Jha is also expected to resign from the startup in the coming weeks, according to media reports.
Looming Layoffs And Financial Turmoil
Quick-commerce startup Dunzo has informed its employees through an internal email that it will defer the payment of pending salaries for June and July until February 2024 due to its current financial challenges.
The delayed payments will also include an additional 12 per cent per annum interest based on the employee's service period. For former employees, their outstanding payments, which cover August and September salaries, will be part of the full and final settlement to be disbursed by February 2024.
Dunzo had initially communicated this delay in August, setting a payout target of the first week of October for those who resigned or were laid off after 1 June, 2023.
It has announced at least three rounds of layoffs and also deferred or reduced salaries for some employees as well as reduced 50 per cent of its dark stores.