Google-Backed Delivery Platform Dunzo Cuts Staff Months After Deferring Employees' Salaries: Report

Indian delivery platform Dunzo has reportedly laid off an unknown number of staff across different teams months after salary payments to employees were delayed. The firm is reportedly close to securing up to $30 million in fresh funding from key backers Google and billionaire Mukesh Ambani's Reliance Industries as it races to stay afloat.

Dunzo resorted to layoffs as it continues to grapple with a cash crunch, Business Today reported Monday, citing unnamed sources. A departing employee from the engineering department told the outlet that workers were informed "the full and final settlement will take place in January."

"The full and final settlement will include the pending salaries of the past months, which were deferred since June, and 15 days severance," another person said.

The exact number of affected employees is unknown. Dunzo did not immediately respond to International Business Times' request for comment.

The quick commerce platform reportedly deferred the salary payments of some employees in June, with "all employees manager grade and above" only receiving 50% of their salaries. At the time, a Dunzo employee said there were speculations of restructuring "amid a cash crunch."

The e-commerce firm, based in India's tech hub of Bengaluru,also reportedly let go of 150-200 employees in July after eliminating around 300 roles early in April.

The April layoffs were implemented around the same time the online delivery platform secured $75 million in funding through convertible notes. About $50 million of it was reportedly from Reliance and Google parent Alphabet. The fresh funds were injected as Dunzo sought a new business model, which included cutting about 50% of the firm's stores and partnering with merchants and supermarkets.

The latest round of layoffs came hours after Moneycontrol reported that Dunzo was close to securing fresh funding of $25-$30 million from key investors such as Reliance, Google and London-based private equity firm Lightrock. The funding round will reportedly be on a pro-rata basis, meaning backers will inject cash based on their existing stake in the platform.

Reliance has a 25.8% stake in the platform and is Dunzo's largest shareholder. Google is in second place with a 19% stake.

Indian startups have been going through a funding crunch in recent months. In the first quarter of 2023, Indian startups landed only $2 billion in funding, marking a 75% drop from the same period in 2022.

"This is a fundamental reset, not just another blip," said V.T. Bharadwaj, former India managing director of Sequoia Capital.

Inflation and high rates were the key issues investors faced. The funding crunch in India is more severe due to the country's reliance on foreign capital, analysts observed. As a result, layoffs have been rampant among Indian startups and some companies have even delayed IPOs.