Dunzo’s story is a grim tale of ambition, innovation, and the perils of overextending in an unforgiving market. From humble beginnings as a WhatsApp-based delivery service to becoming a household name in India’s hyperlocal delivery space, Dunzo’s journey was nothing short of meteoric. However, what once seemed like a promising success story has turned into a struggle for survival.
With mounting debts, reduced operations, and its founder caught in the crossfire of financial turmoil and strategic missteps, Dunzo now serves as a somber reminder of the fragility of startups in a highly competitive landscape.
This article explores Dunzo’s rapid rise to prominence and its subsequent decline, unraveling the factors that led to its current predicament. It also provides insights into the lessons startups can learn from Dunzo’s story — lessons that could be the difference between thriving and falling into obscurity.
A Humble Beginning
Dunzo started as a simple WhatsApp group in Bengaluru in 2014, with its founder, Kabeer Biswas, personally managing deliveries. Customers could request everything from groceries to document drop-offs, and Biswas handled these requests with hands-on efficiency. His problem-solving approach won over early users, creating a loyal customer base.
By 2016, Dunzo had transformed into a formal business, securing initial investment from Sahil Kini of Lightrock. The company quickly scaled up, going from 15,000 orders per month in 2016 to over 2 million by 2021. The hyperlocal delivery model resonated with urban Indians, who sought convenience and efficiency in their daily lives. Dunzo’s growth was fuelled by investments from major players, including Google, which made its first direct startup investment in India by participating in Dunzo’s Series B funding round in 2017.
At its peak, Dunzo was synonymous with on-demand delivery, offering users a one-stop solution for their everyday errands. It was innovative, user-friendly, and positioned itself as a trusted player in a nascent but rapidly growing market.
The Quick Commerce Gamble
Despite its initial success, Dunzo faced a turning point in 2021. While its core hyperlocal delivery business showed potential for profitability, the company decided to venture into the quick commerce space—a decision that would ultimately become its undoing.
🚨 Dunzo has stacked up debt and vendor liabilities of over Rs 600 crore❗️
The company is looking for a buyer who can take over this liability.
While its consumer arm has scaled down, Dunzo continues to run the B2B business 📨https://t.co/54cSMWS7ci
— Madhav Chanchani (@madhavchanchani) January 4, 2025
Quick commerce, which involves delivering groceries and essentials within 15-30 minutes, required significant investment in infrastructure. To compete with well-funded rivals like Swiggy Instamart, Blinkit, and BigBasket, Dunzo introduced its own offering, Dunzo Daily. However, the shift from a flexible hyperlocal model to a rigid, inventory-heavy dark store model proved challenging.
Dunzo underestimated the complexities of quick commerce. The infrastructure costs, operational demands, and stiff competition quickly drained its resources. While competitors focused on unit economics and operational efficiency, Dunzo struggled to adapt. Former employees later admitted that while the company’s technological solutions looked promising on paper, they failed to deliver results in the real world.
Reliance Investment: A Double-Edged Sword
In 2022, Dunzo secured a significant investment of $240 million from Reliance Industries, which acquired a 27.6% stake in the company. This infusion of capital gave Dunzo a lifeline, allowing it to expand operations and pursue its quick commerce ambitions. However, the partnership came with strings attached. Reliance gained veto powers over key decisions, and disagreements between the two parties soon surfaced.
Reliance’s involvement created new challenges for Dunzo. Requests for additional funding were denied, and the company faced mounting pressure to turn cash flow positive. By 2023, Dunzo had no choice but to scale back its operations, exiting the quick commerce segment in most cities and limiting its presence to Bengaluru.
Exclusive: Reliance Retail Writes Off $200 Mn Dunzo Investment
If the company is acquired for the reported price of $30 Mn, it would be a staggering discount on the $770 Mn valuation commanded by Dunzo during its last funding round. https://t.co/xZZs9NMTWF
— Dhruva Pandey (@Dhruvapandey) January 5, 2025
Mounting Losses and Financial Troubles
The financial strain on Dunzo became evident in its balance sheets. The company’s losses ballooned from ₹464 crore in FY22 to ₹1,801 crore in FY23. Despite attempts to cut costs and streamline operations, Dunzo’s debt accumulated to around ₹600 crore. Reports indicated that Dunzo was barely surviving, with daily orders reduced to 40,000 and its workforce slashed from 2,000 employees to just 50.
Adding to its woes, a group of creditors filed an insolvency application against Dunzo in July 2023, citing unpaid dues. Former employees also reported delays in receiving their salaries, highlighting the extent of the company’s financial distress.
The Founder’s Final Act
For Kabeer Biswas, Dunzo’s fall has been deeply personal. Having built the company from scratch, Biswas was at the forefront of efforts to save it. He went without a salary for 20 months and navigated negotiations with potential investors. However, these efforts failed to yield results, leaving Biswas in a difficult position.
🚨New: Dunzo’s Kabeer Biswas may join Flipkart Minutes to lead ops, per sources. Comes days after we first and exclusively reported that he is quitting Dunzo. Will give FK an edge over qcomm peers as he has cut prof teeth in hyperlocal. Google a common investor b/w FK and Dunzo
— Tushar Goenka (@Goenka_Tushar1) January 5, 2025
Biswas holds a 3.39% stake in Dunzo and remains one of its two directors — a role he cannot relinquish until the company is either sold or liquidated. Reports suggest that Biswas is actively seeking buyers for Dunzo, with the company’s valuation now estimated at just ₹25-30 million, a sharp decline from its peak valuation of $770 million. Kabeer Biswas is also reportedly considering stepping down from his role, according to sources familiar with the matter. Discussions about his potential departure have been ongoing with investors. Former Dunzo executives are also exploring new ventures. A consensus needs to be reached regarding Biswas’ exit, with some shareholders open to the idea, but the final decision rests with Reliance Retail, Dunzo’s largest shareholder. The company is actively seeking a buyer to take over the business and assume its debt and liabilities
