India’s errand-running startup Dunzo raises USD 2.8 million in debt to enter new markets

What started as a WhatsApp-based task management service, has now expanded into bike taxis

Image Credit to 699pic.com. Modified by KrASIA

Bengaluru-based hyperlocal delivery platform Dunzo has raised a flurry of funds this month to jump-start its expansion plan of entering new cities and counter new rivals such as cash rich food delivery platforms Swiggy and Zomato that are slowly expanding their operation to deliver more than just food.

With the latest USD 2.8 million debt from Alteria Capital—a venture debt fund—Dunzo has raised a total of USD 4.8 million this month. It issued debentures as well as Series C1 preference shares to raise the capital. Till date, the total debt capital raised by the company stands at USD 7.8 million.

Sources at the Google-backed Dunzo, told local newspaper, The Hindu Business Line that the company is looking at another round of funding worth USD 100 million by the first quarter of 2020. The funds are in the anvil to help it expand to 200 locations across 20 cities averaging 10 locations per city. Currently its services are available in Bengaluru, Mumbai, Pune, Delhi, Noida, Gurgaon, Hyderabad, and Chennai.

Founded in 2015 by Ankur Aggarwal, Dalvir Suri, Kabeer Biswas and Mukund Jha, Dunzo is Google’s first direct investment in India. Dunzo uses its 35,000 strong delivery partners to pick and deliver groceries from any of the 5,000 local stores it has partnered with. It also acts as a home and office assistant to run errands as its delivery partners pick and drop almost anything and everything from one point to another. Last year it expanded its service to offer bike-taxis much like Go-Jek, and claims to have 4,500 bike-taxi partners in Delhi-NCR, Hyderabad, and Jaipur.

At present, 60% of its business comes from users purchasing groceries from local stores, followed by pick and drop services at 30%, and 10% from its bike taxi services.

Dunzo’s CEO Biswas says, “By December 2019, we want to clock 8 million transactions per month. We will make it happen. And by next year we want to get to 25 million transactions.”

According to Biswas, the current market size in which they are operational has 40-50 million users who transact around 10-15 times a month. He wants the offline transactions in this bracket to be digitised with Dunzo being the enabler and seeks to get a big pie of the market.

Hyperlocal startups like Dunzo will have to confront regulators too as last year it got into trouble for delivering alcohol. It will also have to work with transport authorities to sustain its bike-taxi ambition, especially in its home-state Karnataka where transport authorities had stopped Ola from operating bike-taxis earlier this year.

Close on the heels of Dunzo is Swiggy which recently launched Swiggy Stores and Swiggy Go to offer Dunzo like service. Zomato too seeks to exploit its food delivery model asset. Food delivery companies seek to effectively utilise their asset as apart from meal hours—breakfast, lunch and dinner—the rest of the time the delivery fleet can do other deliveries. Swiggy claims to have 250,000 delivery partners across 290 cities while Zomato puts this number at over 120,000.