Competition in the hyperlocal field has been growing as the pandemic has led to a rush of customers to online commerce. Tata Digital, a unit of Tata Sons Ltd, has begun talks to buy close to a controlling stake in hyperlocal delivery startup Dunzo, according to resources.

The potential deal may value the six-year-old company at around $150-200 million, Dunzo Digital Pvt. Ltd, backed by Google, Lightbox and Blume Ventures, among others, had raised $40 million (around ₹290 crore) as part of its Series E funding round.

A report in April said the company was planning to raise as much as $150 million to extend its reach and become a $1-billion revenue business in the next two years. Dunzo was launched in 2015 by Kabeer Biswas, Ankur Agarwal, Dalvir Suri and Mukund Jha. In February 2020, Dunzo raised $11 million in venture debt from Alteria Capital, Alteria Capital had in November 2018 provided the company around $1 million. The emailed queries to Tata Digital remained unanswered till press time.

In October 2019, Dunzo raised $45 million in a funding round from Google, Lightbox, US-based growth equity firm 3L Capital, and South Korea’s STIC Investment and STIC Ventures. Its other backers include Blume Ventures, Kalpavriksh Fund and Patni Wealth Advisors, according to VCCEdge. 

As per the valuation report filed with the Registrar of Companies, Dunzo was valued at $220 million in June 2020. Dunzo’s revenue from operations grew over fourfold to ₹77 crore for the year ended 31 March 2020. Operational expenses grew to ₹414 crore for 2019-20 from ₹185 crore a year ago. The company posted a loss of ₹343 crore for 2019-20, up from ₹169 crore the previous year. 

A spokesperson for Dunzo stated that the company doesn’t want to comment on speculative news and added: “We’re very surprised by the buyout question, which is not up for discussion at all. That being said, we want to highlight: Dunzo has doubled as a business in the last 75 days and processes over $200 million in annualized gross merchandise (GMV) value.”