As Kabeer Biswas jumps to Flipkart, no resolution yet in sight for Dunzo

Biswas recently resigned from the company he co-founded 10 years ago and made a household name. He is now set to join Flipkart by the end of the month to lead the Walmart-owned company’s newly launched quick-delivery business, Minutes, said a person familiar with his plans, declining to be identified.

Dunzo, meanwhile, is swamped with liabilities of as much as $70 million and still has 30-40 full-time employees, as per media reports. Biswas left Dunzo after trying for about a year to find a resolution for the company through a sale or by raising fresh funds.

“We would love to find an outcome that helps the company settle whatever dues it has, helps the company manage its employees that are there in some way, and allows everybody to move forward,” said Sandeep Murthy, partner at Lightbox Ventures. “We have to be open to exploring everything.”

Reliance Retail owns a 25.8% stake in Dunzo, Google India owns 19.3%, and Lightbox about 10%. Blume Ventures, Lightrock, and the co-founders—Dalvir Suri, Mukund Jha, Ankur Agarwal, and Biswas—own the remaining stake.

Dunzo was founded in 2014 as a hyperlocal convenience platform for consumers and businesses. A few years later, it pivoted to delivering groceries, and eventually into the hypercompetitive quick-commerce space.

“The amount of capital that’s required to succeed in this space (quick-commerce) is significant. In that context and that backdrop, being an undercapitalized player, albeit the first one in this space, does make it challenging then to say what the outcome here will be,” Murthy told Mint. “With Kabeer moving on, there is also a realization that the opportunity to build something significant here is probably not going to be the case.”

Murthy added that Dunzo employees who were reporting to Biswas will manage the company’s operations. “Kabeer is mindful of his obligations. So he’s not going to step away entirely from his responsibilities. But he is not going to be driving the (operations) or strategy of the business,” Murthy said.

Biswas and Dunzo didn’t immediately reply to emails seeking comment. Flipkart, Reliance Retail, Google and Lightrock did not respond to Mint’s queries emailed on Wednesday. Blume Ventures declined to comment.

Also read | Dunzo could have been a Zepto. So why did it fail?

A bruising cash burn

Since its inception, Dunzo has raised about $470 million from investors. But over the past two years, the startup has found itself in a tough spot after burning through the cash. 

After multiple rounds of layoffs and delayed salary payments, Dunzo laid off 150 employees in August last year, leaving it with just 50 employees in the supply and marketplace teams, Mint reported. 

Dunzo also shut its grocery delivery business in 2023 but continued operating Dunzo 4 Business, a courier service for businesses.

The company was also in talks to raise $22-25 million in a mix of equity and debt from a clutch of new and existing investors, which did not materialize.

“There’s a lot of regret within the company that Dunzo did not capitalize on the first-mover advantage in the grocery-delivery space. They burned a lot of money without a strategic roadmap,” said an industry executive on condition of anonymity.

Murthy said the company still has a debt overhang.

“And until you can figure out how to manage (the debt) you have no real chance of scaling up what is now starting to look like a very reasonable business. It may not be the scaled business, the large business, but a lot of people might find that to be an attractive business and build up from here,” Murthy said.

“Anybody putting in money would rather put the money towards growing the business rather than dealing with the debt. Again, a very telling lesson for companies of this nature—should you be putting yourself in that kind of a position?,” Murthy added. “I think it’s kind of a lesson to be considered, saying be thoughtful about how you grow.”

Also read | Saving private Dunzo: Where’s the white knight?

Lost opportunity

Dunzo started as a WhatsApp group that delivered orders within a city—beginning with Bengaluru—and soon became one of a few Indian startups to become a verb: “Dunzo it”.

In August 2021, the company launched its grocery-delivery service, Dunzo Daily—about the same time that quick-commerce platforms Zepto, Swiggy Instamart, and Blinkit were becoming popular among young, urban consumers for their last-minute needs. 

In January 2022, Dunzo raised $240 million at a valuation of $775 million from Google, Reliance Retail and Lightbox to expand its dark store network to more cities.

However, Dunzo struggled to keep costs in control. Its quick-commerce business burned as much as ₹230 per order in the first half of 2022, according to an Entrackr report. In 2022-23, Dunzo posted a loss of ₹1,800 crore, nearly four times wider than in the previous year. Revenue, however, jumped fourfold to ₹226 crore.

In an email to employees in August last year, Biswas said the company was nearing a position where it could claw back profits to pay off its liabilities, including salaries of current and former employees and payments to its vendors. But that didn’t come through.

Also read | NCLT gives Dunzo two weeks to settle dues

Third time lucky for Flipkart?

Flipkart’s Minutes is the online marketplace’s third attempt in the grocery-delivery segment. In 2015, the company launched a service called Nearby to deliver goods within 60 minutes. But it had to shut it down because of unfeasible unit economics. 

In 2020, Flipkart tried again with a service called Flipkart Quick, which it had to shut for similar reasons. Now, with an impending initial public offering, Flipkart will need Biswas to scale Minutes to stay relevant in a field teeming with highly funded competitors.

“Serial entrepreneurs, especially those who have tried and failed, come with a lot of learnings. Given that Flipkart entered (the quick-commerce space) much later than the rest, it will be interesting to see what Kabeer can bring to the table,” said the industry executive quoted above.

Dunzo wasn’t Biswas’s first venture. He had founded a deals discovery platform called Hoppr in 2011, which was sold to Hike Messenger in 2014.

As for Dunzo, the firm is in the middle of hearings with the National Company Law Tribunal (NCLT) and was most recently pulled up for not reaching a settlement with its creditors despite being given “enough time” to resolve the matter.

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