Dunzo gets $45m to fight Swiggy, Amazon

Digbijay.Mishra@timesgroup.com

Bengaluru: On-demand task management startup Dunzo has closed a $45-million (about Rs 320-crore) financing round with three new investors joining the latest funding — venture capital firm Lightbox, South Korea’s STIC Ventures, and US-based 3L Capital.

The latest round, which is being led by Lightbox, may see a top-up of another $10 million, taking the total size to about $55 million, people aware of the matter said.

After the fund-raise, the company has been valued at $180-200 million, the sources added. Google, which made its first direct investment in Dunzo in 2018, has also participated in this round.

Dunzo co-founder and CEO Kabeer Biswas told TOI the company will invest the new capital in its technology platform and scale up its commerce business where it ties up with mid- to large-sized merchants to deliver a range of products like grocery, staples, food and medicine.

“Commerce business is about 50% of our total volumes now and it could be bigger next year. We have seen it (commerce) leading to more unplanned purchases on the platform,” Biswas said. Apart from commerce, Dunzo delivers packages from one point to another while it also offers bike-taxi services in the national capital region (NCR) and Hyderabad.

This comes at a time when the hyper-local delivery sector is heating up with the recent entry of Swiggy, and Amazon too launched its two-hour grocery delivery service — AmazonFresh — in August. Amid the rising competition, Dunzo gradually increased delivery charges by Rs 4-5 per order.

In January 2018, Dunzo was clocking 40,000-50,000 orders per month. This has now scaled up to 20 lakh orders a month. According to Biswas, Dunzo has managed to bring down its losses per delivery while growing its monthly order volume.

“From a loss of $2 (Rs 142) per delivery, we have brought it down to about 40 cents (around Rs 30). We have been able to scale while we figured how to make most or a large part of transactions profitable or be close to profitability,” he said. He added that Dunzo is trying to be frugal in a low-margin business to build sustainability over the long term.

At present, it claims to have some parts of cities profitable, but it is hoping it can achieve the same at a city level in the next six months. All said, Dunzo’s latest financing round was stretched over to an extra couple of months as investors have been wary of deep-pocketed players like Swiggy, which raised $1 billion in December 2018, entering the space.