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Quick commerce startup Dunzo has formally informed its staff about fresh layoffs, which will impact around 150-200 employees, people aware of the matter said. This is the third round of layoffs at the Reliance Retail-backed firm, which is grappling with cash flow issues.
Over the last eight months, Dunzo has had to fire close to 400 employees as it was forced to scale down its consumer facing business–Dunzo Daily– and moved its focus to the B2B vertical, Dunzo Merchant Services.
The employees were officially informed of the layoffs by cofounder and chief technology officer Mukund Jha in a short meeting on Friday. The fresh layoffs are part of plans to internally cut costs by 30-40%.
A spokesperson for Dunzo declined to comment.
ET had first reported on July 20 that new layoffs had begun at the firm and employees were being informed about the cuts.
The firm is also engaged in talks with its largest investor Reliance Retail, which has a stake of about 26%, to raise around $20 million, ET reported earlier.
The Bengaluru-based firm’s chief executive, Kabeer Biswas, continues to be in talks with investors to arrange a new financing.
Dunzo’s cash flow problems have now come to the fore after it failed to raise the entire $75 million it had targeted via a convertible notes issue, with only Reliance Retail and Google subscribing to the notes and its other shareholders staying away.
In raising funds through convertible notes, a company doesn’t have to ascribe a valuation and it can be linked to the next fundraise, or eventually even an IPO.
Dunzo had raised this capital through convertible notes, so it doesn’t have to take a hit on its last valuation of nearly $800 million as a funding winter continues to slow down big-ticket deals.
Startups like Udaan, Healthifyme and others have raised different amounts of capital through this instrument recently.
The new job cuts were announced after the Bengaluru-based firm had to postpone payment of employee salaries for June and July to September.
“For those team members who were expecting the balance pay-outs of their June salary during this week, we regret to inform you that this has been delayed. The pending salaries for June will now be paid on September 4th, 2023,” Dunzo told employees in a note on Wednesday. “Additionally, the July salary for all team members will be paid only on September 4th along with the August salary.”
The firm had shut down half its dark stores before the April financing announcement, and that figure has now gone up to about 70%, people aware of the matter told ET earlier this week.
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