Delivery App Dunzo to Raise $150 Million Fund

Google backed Courier delivery platform, Dunzo Digital is planning to double the amount of capital it has raised so far to stretch its presence across the country and to become a $1 billion revenue business in the next two years.

Dunzo connects the low-cost couriers to numerous individual merchants, and has lured Indians with its rapid delivery of items ranging from groceries to parcels in high traffic cities. Dunzo has so farfetched about $140 million fund and intends to tap investors for roughly another $150 million in 2021.

In an statement, Kabeer Biswas, CEO, Dunzo says, “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.”

He continues stating that the company may extend to two more cities in 2021, and then build toward a presence in 20 urban areas by mid-2023. Furthermore, it is also intending to initiate 15-minute deliveries for a range of 2,000 commonly-sought-after items.

Being established in 2014, Dunzo was started as a WhatsApp service, where customers would pay about $6 per order.

However, now the company is tapping into growing Internet usage and accessibility in India, where tech and consumer startups are blooming as the number of smartphone users are touching 1 billion. E-commerce has been the quickest growing channel for fast-moving consumer good products in recent years, and now accounts for about five percent of all such sales, according to Jefferies.

Presently, the second wave of Covid-19 infections sweeps India, thus, Dunzo and other food delivery services are witnessing its impact in their business. Competing firms riding that boom include food-delivery app Swiggy, which stated that it’s raising $800 million.

The escalating imposition of state-level restrictions “is a negative development for consumption in general” but web-based retail would likely get a “boost,” Jefferies analysts, including Vivek Maheshwari, wrote in a report.

Kabeer adds, Dunzo has doubled its annual sales in 2020 and expect the same rate of growth this year as well. However, Dunzo’s biggest operation in Bengaluru is now breaking even.

He continues, “You make 20 cents an order -- the only way to make this business works is at scale. It’s important to be extremely disciplined in your geographical expansion, because you could suddenly start losing money everywhere.”