Reliance-Backed Dunzo Slips Into Insolvency — Another Startup Dream Cut Short

In India’s startup ecosystem, dreams rise fast. Billions are poured into ideas that promise to change the way we live, shop, commute, or work. Yet, as history has shown, many of these bright sparks burn out just as quickly.

Over the last decade, the list of once-celebrated startups that ended up in insolvency has grown longer — from Stayzilla, the pioneer of budget homestays that collapsed under vendor disputes, to furniture rental player Furlenco, which went into distress before finding a buyer. Even hospitality giant OYO faced brushes with legal notices and mounting debts before clawing its way back. Each case has been a reminder of how brutal the startup race can be.

Now, another big name has joined that list: Dunzo — the Reliance- and Google-backed delivery startup that once promised to be India’s answer to hyperlocal convenience.

The Dunzo Story: From First-Mover to Fallen Star

On paper, Dunzo had everything going for it. Founded in 2015, the Bengaluru-based startup was among the earliest to make “anything delivered in minutes” a household promise. From groceries and medicines to forgotten phone chargers, Dunzo became synonymous with last-mile convenience in India’s urban centers.

Its investor roster read like a who’s who of global and Indian capital — Reliance Retail, Google, Lightbox, Blume Ventures, Aspada, STIC, and Lightrock. Between 2015 and 2022, it raised close to $485 million. The biggest boost came in January 2022, when Reliance Retail pumped in $200 million for a 25.8% stake, instantly making it the largest shareholder. For a while, Dunzo seemed unstoppable.

But behind the glossy headlines, cracks were forming.

Despite the money, Dunzo couldn’t crack the fundamental question of unit economics. While it had pioneered hyperlocal delivery, it was late to the quick-commerce gold rush that began around 2021. Rivals like Blinkit (later acquired by Zomato), Zepto, and Swiggy Instamart aggressively scaled up with deeper pockets and sharper playbooks. Dunzo, meanwhile, shut down dark stores in key cities, struggled with liquidity, and watched the competition sprint ahead.

The Dunzo Fall: Insolvency, Vendor Battles, and Leadership Exits

The latest blow came when the National Company Law Tribunal (NCLT) admitted Dunzo into insolvency after multiple vendors filed pleas over unpaid dues. The first plea was filed by Velvin Packaging Solutions Pvt Ltd in September 2024. Now, Exotel Techcom Pvt Ltd has added to the list, prompting the tribunal to officially push Dunzo into the Corporate Insolvency Resolution Process (CIRP).

According to the NCLT order:
“Under Section 9 of the I & B Code 2016 read with Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules 2016 and IRP has been appointed. The petitioner herein can prefer its claim before IRP/RP on being notified.”

This insolvency move comes just weeks after Reliance Industries Ltd (RIL) wrote off its $240 million investment in Dunzo — a stark admission that the bet didn’t pay off.

The financial picture speaks volumes. In FY23, Dunzo’s operating revenue stood at just INR 226.6 crore, while its losses ballooned to INR 1,801 crore. Vendor disputes piled up. Salaries were delayed. In July 2023, even tech giants Google and Facebook issued legal notices over pending dues. By then, the writing was on the wall.

The unraveling also played out at the top. Cofounder Dalvir Suri left in late 2023, followed by Mukund Jha. Finally, in early 2025, even CEO and cofounder Kabeer Biswas stepped away, moving on to lead Flipkart’s quick-commerce vertical, Minutes. Jha, meanwhile, started a new AI coding venture, Emergent.

Dunzo Joins the Growing List of Startup Insolvencies

Dunzo’s fall isn’t an isolated story. India’s startup ecosystem has seen multiple high-flyers stumble into insolvency in recent years.

• Stayzilla, once the poster child for India’s homestay economy, shut shop in 2017 after being dragged into vendor disputes and mounting losses.

• Koinex, one of India’s earliest cryptocurrency exchanges, shut down in 2019 amid regulatory uncertainty.

• GoMechanic, the car servicing startup backed by Sequoia and Tiger Global, collapsed in 2023 after admitting to accounting irregularities — and ended up in distress sales talks.

• More recently, Furlenco, the online furniture rental company, was admitted into insolvency proceedings before being acquired.

These stories underline a harsh truth: in the Indian startup ecosystem, capital alone doesn’t guarantee survival. Execution, timing, regulatory clarity, and financial discipline matter just as much.

What Lies Ahead for Dunzo?

For Dunzo, the insolvency process means that an interim resolution professional (IRP) will now take charge. Creditors can file claims, and depending on interest, the company could be restructured, acquired, or liquidated.

While the brand name still carries recall in urban India, the question remains: will any suitor step up to rescue it? Or will Dunzo go the way of Stayzilla — remembered fondly but only as a cautionary tale?

As India’s startup ecosystem matures, Dunzo’s story is another reminder of how fragile even the most well-funded dreams can be. For entrepreneurs, it’s a case study in the fine balance between ambition and execution. For investors, a lesson in the limits of deep pockets.

For the rest of us, it’s a bittersweet end to a service that, for years, felt like magic on our phone screens.