Reliance Retail said on January 6 that it has led a $240 million in on-demand delivery startup Dunzo, giving India’s largest conglomerate access to rapid delivery- one of India’s hottest startup themes attracting a bevy of investors.
Reliance has acquired a 25.8 percent stake in Bengaluru-based Dunzo, valuing the company at about $800 million. Founded by Kabeer Biswas in 2016, the $240 million shot in the arm is more than what Dunzo has raised all these years- about $140 million.
The deal gives Dunzo ammunition to compete against Blinkit (earlier Grofers), new upstart Zepto, Swiggy-owned Instaong others, and deliver groceries and essential items to urban households quickly.
Dunzo’s other investors include Blume Ventures, Google, and Lightbox Ventures. Lightbox, Lightrock, 3L Capital and venture debt firm Alteria also invested.
“Since our inception, we have been razor-focused on providing an unmatched customer experience and this funding round is a validation of our approach. I am proud of the team for tirelessly building the category over the last three years,” guaranteed approval payday loans Lebanon Biswas said in a statement.
“With the investment from Reliance Retail we will have a long-term partner with whom we can accelerate growth and redefine how Indians shop for their daily and weekly essentials,” he added.
While Blinkit and Zepto promise delivery in 10 minutes- a cash-guzzling proposition- Dunzo offers 19-minute delivery, led by its belief that delivering in 10 minutes is not a big enough market yet and that delivery workers will bear the brunt of quick deliveries, CEO Biswas had earlier told Moneycontrol.
“The 10-minute delivery timeline is a little hard to meet without either being disruptive on density where your stores are not going to make any sense or going ahead and really putting a lot of pressure on the delivery partners,” Biswas told Moneycontrol in June.
The retail arm of Reliance Industries has acquired a 25.8 percent stake in Bengaluru-based Dunzo, valuing the company at about $800 million
“People can go ahead and figure out how to run their businesses but we went ahead and picked the 19 minutes because we wanted to make sure that we were empathetic to partners… even if it seems that we are a little slower to people,” he added.
This is Reliance’s second major entry of sorts into the grocery delivery space, besides its own JioMart service. It also acquired Milkbasket last year, which delivers milk and daily staples to households in Delhi, Bengaluru, and other cities.
Dunzo also held conversations with Zomato, Swiggy, and the Tata Group for an investment, but talks didn’t materialize, people familiar with the matter said.
People aware of the matter said that retaining control and staying at Dunzo’s helm was key for Biswas and played a role in finding an investor who will support that vision. “Kabeer did not want to sell the business. He wanted to find a long-term partner who can provide constant capital and strategic inputs. This business needs a lot of money to make sense,” a person said.
The quick commerce frenzy has caught wind globally, with startups such as Jokr, Getir, Gorillas, and others promising 10 minute delivery in cities from New York to Turkey to London. One of these firms loses $159 on every single order, as per a report from The Information, indicating the financially bruising nature of the business.
“We are seeing a shift in consumer patterns to online and have been highly impressed with how Dunzo has disrupted the space. Dunzo is the pioneer of quick commerce in India,” said Isha Ambani, Director, Reliance Retail Ventures Limited.
Disclaimer: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.