Quick commerce company Dunzo has received $240 million in the latest round of funding that was led by Reliance Retail Ventures Limited. This round also saw the participation of existing investors Lightbox, Lightrock, 3L Capital, and Alteria Capital.
Dunzo was reported to be engaged in discussions with Reliance for the past three or four months regarding a possible agreement. There were reports in the media suggesting that the company was in discussions together with Tata Group, Swiggy, and Zomato to discuss a fresh round. But, the talks did not occur.
On the other hand, this deal with Reliance might be seen as a shock, given Reliance Group's history of making outright acquisitions (Netmeds, Milkbasket) or fairly moderate valuations. Even entering into companies that could be under some sort of strain (the current Future Retail buy). FOMO might have hit Reliance at last if you're in the market for a quick trade.
The round is in which Reliance Retail has invested $200 million to purchase a 25.8 percent share in Bengaluru's company on a fully diluted basis. The valuation of the Google-backed firm is up to $775 million. Based on Fintrackr's estimates, it was valued at just over $300 million at the time of its March launch of last year.
According to Dunzo, the capital is to expand Dunzo's goal of becoming the most efficient and quick-to-market business in India, which will allow the delivery of necessities in a matter of minutes through a system of small warehouses and growing its business segment to provide logistics to local retailers within Indian cities.
As part of the collaboration, Dunzo will provide hyperlocal logistics to the retail stores run through Reliance Retail and will also enable last-mile deliveries for JioMart's merchant's network. Dunzo introduced its instant delivery model, 'Dunzo Daily, in Bengaluru at the beginning of this year. The service is currently available across seven cities; the firm is planning to expand its speedy commerce model to fifteen cities.
The fiscal year ended the 31st of March, 2021 where Dunzo reported its profits from operations to increase by 66.5 percent to 45.8 crores from 27.5 crores it earned in FY20. The Kabeer Biswas-led company was able to cut its loss by 33.3 percent from 338.4 million in FY20 to 225.7 million in FY21.
The fast commerce market is growing in India, where Zomato-backed Zepto BlinkIt (formerly Grofers), Swiggy, and Ola are already expanding their operations. Swiggy has recently announced plans to invest $750 million into Swiggy Instamart to focus on rapid commerce, while BlinkIt is said to be seeking additional funding from Zomato. Zepto, a grocery delivery service that can be delivered in ten minutes. Zepto also secured 100 million in funding to increase its coverage to several cities in India.