Dunzo isn’t only bleeding employees and co-founders — its board members have exited too.
As many as 5 of Dunzo’s board members have left the board in the last few weeks. These include representatives from two of its biggest investors, Reliance Retail and Lightspeed Venture Partners. Two of Dunzo’s co-founders have also left its board.
The exits began on 3rd August, when two of Reliance’s representatives left Dunzo’s board. They were Ashwin Khasgiwala roup chief of business operations at Reliance Retail, and Rajendra Kamath, finance head at Reliance Retail. Reliance is the biggest shareholder in Dunzo, and holds a near 26% stake. These exits were followed by the exit of Vaidehi Ravindran, a partner at Lightrock India, who left Dunzo’s board on 21st August. Lightspeed holds a near 8.6% stake in Dunzo.
Since then, two of Dunzo’s co-founders have also left the board. On August 29, cofounder Dalvir Suri left the board. It was reported yesterday that he’d also quit the company. On 1st September, another Dunzo co-founder Mukund Jha left the baord.
“The exits are linked to Dunzo’s cash-flow issues and the legal notices sent to the company for pending dues. The personal liabilities were becoming quite big for the directors,” a person aware of the matter told ET. Dunzo has been sent legal notices from at least 7 vendors, including Facebook, Google and Koo, over pending dues. It’s possible that the board members left to protect themselves from any legal proceedings, and could join the board once the dues are cleared.
But the exit of five of its board members hints at the extent of disarray at what was the pioneer in India’s hyperlocal space. Dunzo has previously fired hundreds of employees, and hasn’t been able to pay salaries. Employees are still waiting for their June salaries, and the company now says it’ll be able to pay them only in February next year.
It’s a sorry state of affairs, but shows how even storied startups can see their fortunes turn in a matter of quarters. Dunzo was Google’s first investment in India, which saw it being backed by one of the biggest tech companies in the world. Dunzo then raised funds from Reliance, which is India’s most valuable company. But Dunzo is now imploding, and could be forced to cease operations entirely. Which just goes to show that startups which are dependent on their investors to fund their losses are vulnerable to such collapses — the moment investors pull the plug on future investments, the entire gravy train can come to a screeching halt.