Hyperlocal delivery startup Dunzo on Tuesday said that it has raised $40 million (about ₹293 crore) in a fresh round of funding from existing and new investors including Google, Lightbox, Evolvence, Hana Financial Investment, LGT Lightstone Aspada, Alteria, and others. The funding comes at a time when online delivery apps in India witnessed a surge in demand from customers who have been working from home ever since the pandemic struck in March. Global investors today feel confident enough to pump in money into these delivery businesses.
The Bengaluru-based company plans to utilise the funds to ramp up its presence across its fastest-growing cities such as Mumbai, Chennai, and Pune.
“We truly believe we are writing a playbook for how hyperlocal businesses can be built with sustainable unit economics and capital responsibility. As a team, we are more focussed than ever to enable local merchants to get closer to their users,” said Kabeer Biswas, CEO and co-founder, Dunzo Digital Pvt. Ltd in a statement.
With a gross merchandise value (GMV) growth of 2x over the past year, Dunzo claims that it is now a $100 million annualised GMV business. Online companies in India typically don’t share their actual revenues. Instead, they use GMV, which is the value of all goods sold on the platform, barring discounts and returns.
The startup said that last year it saw strong organic growth in user demand while maintaining gross margin profitability for the overall business. As Coronavirus cases surged across the country, people began to prefer ordering online, thereby, boosting sales for hyperlocal delivery apps.
Dunzo, that allows users to outsource their delivery needs within a city, today offers a full stack of services across commerce (consumables, pet supplies, health, and wellness), courier (pickup and drop), and commute (bike taxi) across cities.
“As merchants go digital, Dunzo is helping small businesses in their digital transformation journey in support of business recovery,” said Caesar Sengupta, VP, Google, in a statement. “Through our India Digitisation Fund, we’re committed to partnering with India’s innovative startups to build a truly inclusive digital economy that will benefit everyone.” For Internet giant Google, Dunzo is its first direct investment in an Indian startup.
In the last few years Biswas along with Mukund Jha, Dalvir Suri, and Ankur Aggarwal has built the startup into a leading hyperlocal e-commerce platform. The Dunzo app connects the user with the nearest delivery person who can make purchases, pick up items from any store or restaurant, and deliver to the customer’s doorstep. It delivers almost everything from grocery, food, medicine, stationery, courier to any sundry item.
Experts say hyperlocal delivery startups are increasingly developing an appetite for the country’s busy urban population which is willing to pay a price for the convenience of getting things delivered at their doorstep. Besides Dunzo, companies such as Tencent-backed Swiggy, Alibaba-backed Zomato and bigbasket, SoftBank-backed Grofers, Sequoia-backed DailyNinja, and others have also managed to woo global investors to pump money into their businesses.
Investor Evolvence points out that with the market potential and size of the urban convenience seekers increasing across tier 1 and tier 2 cities, Dunzo’s strong value proposition makes it a bold venture ripe for success. “Its playbook on profitability has further instilled confidence in its ability to grow sustainably,” said Evolvence in a statement.