Dunzo’s New Challenge, Co-Founder Dalvir Suri Departs; Indian Startup Top Management Attrition on the Rise in 2023 Amid Ongoing Funding Challenges

Co-founder Dalvir Suri is stepping away from the company after more than six years of dedication to the hyperlocal delivery startup Dunzo; CEO Kabeer Biswas shared the news with employees in an email on October 1st.

Suri joined Dunzo back in May 2015 when it was just a fledgling startup handling orders through WhatsApp. It’s worth noting that Suri, along with fellow co-founders Ankur Aggarwal and Mukund Jha, didn’t possess equity in the company; instead, they received fixed salaries, which, knowing the tough financial challenges faced by Dunzo, were often delayed.

 

Challenges in Dunzo’s Financial Landscape and Fundraising Endeavors
Suri’s departure comes at a time when Dunzo is grappling with financial challenges and actively seeking to secure between $25-30 million in funding.

The company has been struggling to sustain its operations and has had to scale back its customer-focused initiatives due to mounting losses; in order to manage expenses, Dunzo had earlier relinquished its office space in Bengaluru and has simultaneously implemented multiple rounds of layoffs since its inception.

Suri’s Role and Contributions at Dunzo
As one of the co-founders, Suri played a pivotal role in developing new business avenues for Dunzo; he was instrumental in the growth of the company’s B2B business, Dunzo Merchandise Service (DMS), which now accounts for a significant portion of the company’s revenue.

In his email to employees, CEO Kabeer Biswas commended Suri as the “key figure from the founding team who played an indispensable role in taking Dunzo from zero to one.”

Organizational Changes Post-Suri’s Departure
Dunzo intends to discuss the organizational changes necessitated by Suri’s departure in an upcoming company-wide meeting later this week; however, the specifics of who will assume Suri’s responsibilities and how his exit will impact the company’s future plans remain uncertain.

It’s worth noting that Suri had reportedly contemplated leaving the company in the past but ultimately stayed after discussions with CEO Biswas; however, this time, it seems that retaining him proved to be a more challenging proposition for Dunzo.

Dunzo’s Funding History and Major Shareholders
Dunzo, since its inception in 2015, has managed to secure nearly $500 million in funding from notable investors like Reliance, Google, Lightrock, Lightbox, and Blume Ventures.

Reliance stands as the largest shareholder with a 25.8% stake, followed by Google, which holds the second-largest share at approximately 19%; as Dunzo navigates its financial obstacles and fundraising endeavours, the departure of a key co-founder like Suri raises significant questions about the future trajectory of this startup.

Indian Startup CEO Attrition on the Rise in 2023
As the funding challenges persist in the Indian startup ecosystem, 2023 has witnessed a notable increase in CEO departures.

As per data collected by Fintrackr it reveals that within the first eight months of this year, nearly 20 startup CEOs have vacated their positions, opting to either join new firms or take on different roles within their current companies.

The trend is considerably more pronounced than in previous years; the same began in 2022 when companies like BharatPe and Zilingo experienced high-level exits, including former CEO & MD Ashneer Grover and CEO Ankiti Bose, due to financial improprieties.

In 2022, other notable CEO departures included Porush Jain from Sportskeeda, Avinash Shekhar from Zebpay, and Arun Sirdeshmukh from Ola Cars.

Among the prominent startups affected by CEO departures in 2023 are DealShare, BharatPe, upGrad, boAt, and Flipkart Health+ (owned by Flipkart Group), ZestMoney, Cuemath, and Porter’ of these departures, five are from the edtech sector, followed by four each from fintech and healthcare. E-commerce and co-working have also seen three and two CEO exits, respectively.

Senior Executives Leaving Startups for Established Business Groups
In the past ten months, a significant number of senior executives, including CXOs and CXO-1 level professionals, have exited unicorn and soonicorn startups in India.

Approximately 300 of these executives, out of a total of around 750, have chosen to move out of the startup ecosystem to join large traditional Indian business groups owing to unicorns and other new-age companies grappling with the ongoing funding challenges.

Many of these senior executives have found new roles within traditional Indian conglomerates or large domestic companies like Reliance, Aditya Birla, Vedanta Group, JSW Group, Tata Group, and Kotak Mahindra Bank.

As many of these established companies are increasingly focusing on venturing into emerging business sectors and incubating digital-first ventures, they are actively seeking professionals with proven track records from the startup and e-commerce sectors.

Anshuman Das, CEO of Longhouse Consulting, noted, “The funding winter and the subsequent reduction in growth projects have led many senior executives from unicorns and soonicorns to seek opportunities with traditional businesses that offer greater stability. They are also looking for experienced leaders from new-age firms to spearhead their diversification efforts into new growth areas.”

The trend is not only attracting seasoned talent to larger corporations but is also fostering new ideas and approaches within traditional industries.

Santrupt Misra, Group Director Birla Carbon and Director Group HR for Aditya Birla Group, stated, “Large companies are incubating businesses in adjacent areas. We too have our B2B initiative where we have hired talent from new age companies.”

India’s three largest startup investors, including Sequoia Capital India (now Peak XV Partners), Tiger Global Management, and SoftBank, have significantly reduced their investment activity in 2023, down by 80%, emphasising the challenging funding environment.

K Sudarshan, Managing Director, India, and Regional Chair, Asia at EMA Partners, explained, “Most large conglomerates and established companies today are building digital-first businesses and trying out agile business models. These companies are looking to attract seasoned professionals from the startup ecosystem.”

Ankur Pahwa, Managing Partner of venture capital fund PeerCapital, noted, “Innovation agendas in many high-growth, cash-intensive businesses have taken a back seat due to the changing funding dynamics.” Further, coupled with financial uncertainties and future growth prospects, is prompting many individuals to explore alternatives, including roles in large corporations.

The Last Bit, undoubtedly, the Indian startup ecosystem is grappling with unprecedented challenges in 2023, as reflected in the remarkable surge of CEO departures.

This trend, set in motion by financial irregularities in the previous year, indicates the harsh realities startups are facing in a persistently challenging funding environment.

Simultaneously, the migration of senior executives from startups to traditional Indian business groups signifies a significant transformation in the corporate landscape as established giants are embracing digital-first initiatives and actively seeking out experienced hands from the startup world to lead their diversification efforts.

As India’s startup ecosystem continues to evolve and adapt to these shifting dynamics, it remains to be seen how these changes will impact the trajectory of individual companies and the industry as a whole.