Good morning! It’s Wednesday and Twitter DMs have been down for several hours, which has led to a much more productive day for me. Alphabet announced their Q1 earnings earlier today, with $41.1B in revenue (up 13% YoY) and their Cloud business accounting for $2.7B (up 52% YoY).
Coming to today’s news, a look into Dunzo’s financials amidst lockdown + the venture slowdown in India seems very real.
➡️ Kabeer Biswas sat down to give an interview on Dunzo’ state of operations in the lockdown. In current times, it seems most companies are struggling (even some of the ones who are still operating), Dunzo seems to be doing very well.
➡️ Last December, the company decided to scale back operations in a couple of cities to focus on better financials and to reduce their losses per delivery.
➡️ And that move seems to have paid off in the current context. With a lot of companies not being able to operate, and with people ordering essential items to be delivered (as opposed to shopping in stores themselves) Dunzo seems to have benefited greatly.
➡️ People also seem to be more inclined to pay more for online services (as the other option doesn’t seem as safe), and as a result Dunzo has seen the average user order 2.8 times a week (up from 2.1 times a week previously) while spending ₹480 per order (up >2x from ₹220).
➡️ The company also claims that it has reached profitability on a per-order basis in Bangalore and aims to do the same in Pune in the next couple of months. And with increasing order values, frequency of orders as well as reduced CAC spends (users more likely to pay more/don’t need as many discounts), the company in itself could be marching towards being profitable.
➡️ The company only needs to clock in 15M - 17M monthly transactions to be profitable on a company level, and we’ve already seen both Zomato and Swiggy clock in higher multiple of that number in pre-covid times, so it seems to me that Dunzo could achieve that target within a couple of years growing at a reasonable pace (as people will be more comfortable with ordering things to be delivered instantly in the future).
➡️ As expected, the amount of venture capital deployed in startups has dropped quite significantly in Q1 2020 to $2.2B (down from $6B in Q4 2019, and $4.1 in Q1 2019).
➡️ A majority of this capital was also deployed in only a couple companies (BYJUs- $400M, Unacademy -$110M & Bounce $150M), with 33% of the total capital being deployed in just these three investments.
➡️ EdTech has been a clear winner from a segment-wide aspect as learning + teaching online has become a new norm, and we will probably continue to see growth here.
➡️ I also this quote in Ken’s article on social consumer companies yesterday, where Gagan Goyal (Partner @ India Quotient) said- “We are doing deals, but if we were doing 10 in a certain timeframe [before Covid-19], now we would probably do two-three investments,”
➡️ From my conversation with other people in the venture industry, it sounds like a lot more time, effort & capital is going into helping existing companies weather this storm while new investments are not the core criteria for the time being.
➡️ And with the lockdown continuing into April and probably well into May along with greater regulations and approvals into Chinese investments in the country, it seems to be that Q2 would likely be even lower in terms of the capital invested into companies.
Feedback & ❤️ always appreciated
More on Monday :) BONUS (Tweet of the day): https://twitter.com/abhayjani4/status/1255024594907521024