Flipkart discussing acquisition of financially struggling Dunzo
- ByStartupStory | February 21, 2024
Recent discussions between Flipkart and Dunzo, a hyperlocal delivery startup backed by Reliance Retail, have centered around a potential acquisition, according to a TechCrunch report. The negotiations have faced challenges due to complexities in Dunzo’s ownership structure. TechCrunch reported, “However, complexities surrounding Dunzo’s ownership structure have posed challenges in reaching an acquisition deal.” Despite ongoing talks, both parties are yet to finalize the terms of the deal.
Dunzo has encountered financial difficulties, struggling to secure funding and meet staff payroll obligations. The startup has raised approximately $500 million but faces stiff competition from emerging players like Zepto, Swiggy, and Zomato’s BlinkIt in the hyperlocal delivery sector. The Economic Times reported, “Despite having raised approximately $500 million to date, Dunzo has faced increased competition from emerging players such as Zepto, Swiggy, and Zomato’s BlinkIt in the hyperlocal delivery segment.”
Flipkart, valued at over $32 billion, sees potential value in certain aspects of Dunzo’s business, particularly its business-to-business offerings. However, concerns arise regarding the IP ties between Dunzo and Reliance Retail, its primary investor with a 26% stake. Flipkart remains cautious about the assets it would acquire in the deal. TechCrunch mentioned, “Flipkart, valued at over $32 billion, acknowledged the potential value in certain aspects of Dunzo’s business, particularly its business-to-business offerings.”
Over the past three years, Dunzo has engaged in acquisition discussions with various entities, including Tata and Zomato. However, Dunzo denied these reports, calling them “hearsay.” Dunzo, backed by investors like Google, Blume Ventures, and Lightbox, initially aimed to disrupt India’s e-commerce sector with rapid delivery services. However, challenges emerged as consumer preferences shifted. TechCrunch added, “Dunzo, backed by prominent investors including Google, Blume Ventures, and Lightbox, initially aimed to disrupt India’s e-commerce sector with its rapid delivery services.”
PhonePe, a financial services startup that demerged from Flipkart, explored an investment in Dunzo’s merchant network business in late 2023. However, Dunzo declined the offer due to concerns about its strategic partnership with Walmart. The completion of Dunzo’s funding round in 2023 remains uncertain, despite seeking to raise $50 million. TechCrunch noted, “Media reports suggest that Dunzo had also sought to raise $50 million in 2023, though the completion of that funding round remains uncertain.”
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