Dunzo seeks $150 million funding, aims to become a $1 billion revenue business
Dunzo Digital Private Ltd. is a Google-backed delivery startup and has operations in eight cities across the country. It intends to scale its operations across the country and become a $1 billion revenue business in the next two years by increasing the amount of capital it has raised so far twofold.
The app connects low-cost couriers to thousands of individual merchants and has attracted Indians with its speedy delivery of items ranging from groceries to parcels even in cities with huge traffic. The firm has so far raised nearly $140 million and strives to draw investors for around $150 million more in 2021.
Kabeer Biswas, chief executive officer, Dunzo, said in an interview “The expansion only really starts next year at full pace, so we’ll raise the capital this year, but it gets deployed only next year.” The company is looking to expand to two more cities in 2021, then build a presence in 20 urban areas by mid-2023, he added. Dunzo is now also making 15-minute deliveries for a range of 2,000 commonly-sought-after items.
The company was founded in 2014 and began as a WhatsApp service. It later became an app where customers normally pay around $6 per order.
With tech and consumer startups flourishing as the number of smartphone users is almost 1 billion, Dunzo is tapping into the burgeoning Internet usage and accessibility in the country. E-commerce has emerged as the fastest-growing channel for FMCG products in recent years and currently accounts for nearly 5% of all such sales, according to Jefferies.
Dunzo and other food delivery services have also seen Covid-19 increase competition as a second wave of infections sweeps India. Competing firms taking advantage of the boom include the food-delivery app Swiggy, which announced on Monday that it will be raising $800 million.
The growing imposition of state-level restrictions “is a negative development for consumption in general” but web-based retail will likely get a “boost,” Jefferies analysts, including Vivek Maheshwari, wrote in a report on Tuesday.
“The second wave of Covid has presented a great opportunity for online delivery services. Raising the expected funds could place Dunzo ahead of its competitors.”Shishir Gupta, Founder and CEO, StartupLanes
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