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MUMBAI : Reliance Jio may invest in Google-backed Dunzo by participating in the hyperlocal delivery startup’s new fundraising round of $200-250 million, two people aware of the development said.

Billionaire Mukesh Ambani-controlled Jio is in talks with Dunzo to finalize the investment, along with the startup’s existing investors, the people said on condition of anonymity. They did not disclose the size of Jio’s investment.

“Dunzo has been looking at various fundraising options in the last few months. Other strategic investors, including another large corporate group, was also looking at the company for a possible control stake, but those talks haven’t progressed well. Bringing a large group like Reliance on board could be a shot in the arm for Dunzo as the hyperlocal delivery business is seeing very intense competition from the likes of Swiggy and others," one of the two people said.

Raising the stakes
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Raising the stakes

“They are looking to raise as much as $200-250 million in this round at a valuation of close to $800 million. Some existing backers of the company are likely to double down on their investment in Dunzo in this round," the person said.

Reliance Jio did not respond to an email till press time, while an email and text message sent to Dunzo co-founder Kabeer Biswas remained unanswered.

Dunzo’s most recent fundraising was in January when it gathered $40 million from Lightbox, Evolvence, Hana Financial Investment, LGT Lightstone Aspada and Alteria Capital. Till then, the startup founded in 2015 had raised $121 million in capital. Blume Ventures, Kalpavriksh Fund, and Patni Wealth Advisors are also investors in Dunzo.

Dunzo was set up by Biswas, Ankur Agarwal, Dalvir Suri and Mukund Jha.

Mint and VCCircle reported in June that Tata Digital, a unit of Tata Sons Ltd, had begun talks to buy close to a controlling stake in hyperlocal delivery startup Dunzo. Later in September, Mint also reported that food delivery platform Swiggy, too, evinced interest in acquiring Dunzo.

Competition in India’s hyperlocal space has accelerated as the pandemic and lockdowns led to a deluge of online shoppers. This has led new companies to enter the fray, seeking to tap this burgeoning market. Last July, Walmart-owned e-commerce giant Flipkart started a hyperlocal delivery app Flipkart Quick in Bengaluru. Food delivery platform Swiggy, which forayed into instant grocery service through Instamart and also launched pick-and-drop service via Swiggy Genie last year, is actively looking to ramp up its overall presence in the hyperlocal delivery segment.

Swiggy’s rival, Zomato, which went public in July with a valuation of about $13 billion, has also shown interest in hyperlocal business both through an in-house grocery delivery offering and investment in Grofers, an online grocery delivery company.

Meanwhile, Tata Sons took a majority stake in online grocer BigBasket earlier this year in a move that would pitch the conglomerate against established heavyweights such as Amazon, Reliance Industries Ltd and Flipkart. Tata is also working on its TataNeu super app, a one-stop destination for all of the conglomerate’s digital services.

In a boost to the hyperlocal delivery space, customers were found to be more open to pay extra sums for express or same-day deliveries, management consultant RedSeer and logistics player Shadowfax said in June in its ‘Delivery Delight Index’ report. It found buyers willing to pay an average fee of up to 44 for express e-commerce deliveries for essential categories, including pharmacy and groceries.

For Reliance, which is looking to make a major dent in the e-commerce space, an investment in Dunzo could bring important learnings on express deliveries since the oil-to-telecom conglomerate has to play catch-up with more established rivals BigBasket, Grofers, Flipkart and Amazon who have taken close to a decade to build their online presence.

In early June, Dunzo said it processes more than $200 million in annualized gross merchandise value (GMV). Dunzo’s revenue from operations grew more than fourfold to 77 crore for the year ended 31 March 2020, according to the latest available data. Operational expenses grew to 414 crore during the year from 185 crore in the previous year. Losses, however, more than doubled to 343 crore from 169 crore during the period.

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