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Cash Crunch Leads Dunzo to Delay Salary Payouts for the Second Time

• ByStartupStory     |    July 20, 2023

Quick commerce startup Dunzo has faced challenges in managing its finances, leading to the delay of salary payouts for the second time in a fortnight.

While June salaries were disbursed on time, the company, backed by Reliance Industries and Google, had capped payouts at ₹75,000 for employees earning more.

In a recent email to its employees, Dunzo informed them that July and August salaries, along with the unpaid portion for higher earners, will now be paid on 4 September. This decision comes after an earlier plan to pay the unpaid portion by 15 July.

“At this stage, we need to focus on streamlining our cash flow so we can build a more sustainable business for the future,” the company’s payroll team stated in the email, as reviewed by Mint.

Approximately 500 employees, comprising 40-45% of Dunzo’s workforce, were affected by the move to cap salaries. The company had previously terminated around 30% of its staff in April.

The spokesperson for Dunzo did not respond to queries regarding the salary delay.

In April, Dunzo raised $75 million in debt funding through convertible notes. Investors such as Google, Reliance, Lightbox, Evolvence, and Alteria Capital have shown support for the startup.

To mitigate the financial strain, Dunzo is reportedly in the process of raising approximately $50 million from new investors. Many high-growth startups facing rapid cash burn are struggling to secure additional funding as they approach the end of their runway.

In an effort to manage expenses, Dunzo is transitioning to an asset-light model, shutting down half of its dark stores and retaining only those with stronger unit economics. The company is striving to resolve the salary payout issue promptly to minimize its impact on team members.

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