Dunzo, backed by Reliance and Google, delays employee salaries again

Dunzo informed its employees on Wednesday that it would not be able to meet the postponed deadline for their monthly wages as trouble mounts at the hyperlocal delivery startup that expended over $150 million in the last 18 months trying, unsuccessfully, to emulate the model of its younger competitor, Zepto.

The Bengaluru-headquartered startup, backed by Google and Reliance Retail, informed its employees that their outstanding salaries will now be disbursed in the first week of October instead of the previously scheduled date of September 4.

“Ensuring that you receive your due compensation as early as possible is our top priority. Please be assured that we are doing everything to make this happen, and we are confident that there will be no further delays after this,” the company wrote in an email.

The startup had partially deferred making June payroll for some employees and delayed July and August salaries for all staff. Dunzo, which delivers grocery and other items, has been delaying the salaries as it attempts to streamline its cash flow and aggressively hunts for new funding.

The eight-year-old startup, which secured some funding just a few months ago, has raised nearly $500 million altogether and was last valued at $757 million, according to market intelligence firm Tracxn.

Dunzo has been looking to raise a large funding round for several quarters. The company was eyeing as much as $150 million earlier and could only secure about $45 million in a recent funding round, Indian news outlet Economic Times reported. TechCrunch reported in late March that Dunzo was finalizing a $50 million round.

Zepto, a rival to Dunzo, earlier this month announced it had raised $200 million in a new funding round at a valuation of $1.4 billion.

Numerous startups globally are struggling to raise new funds as venture investors become cautious about new backings amid the weakening economy. It also doesn’t help that Dunzo operates in the cash-guzzling category of instant grocery delivery that is increasingly seeing consolidation across the globe.

Zomato acquired the struggling 10-minute grocery delivery startup Blinkit in a $568.1 million all-stock deal last year. Food delivery giant Swiggy, which operates in the space through Instamart, has also slowed the growth of its instant grocery delivery business in recent quarters.

Dunzo, in the meantime, has shut more than half of all its so-called dark stores — warehouses dotting a city where firms store their inventories — in recent quarters and is increasingly prioritizing its business-to-business offering, the paper reported.