It was only the beginning of winter in Bengaluru but Kabeer Biswas was starting to worry about the monsoon of 2018. The Karnataka capital, challenged with traffic round the year, seizes up when it rains. It means slower traffic and fewer people to run tasks for customers who depend on his hyperlocal, concierge services startup Dunzo.

With about 1,500 runners, Dunzo services nearly 100,000 transactions a month in the city. It took about $2 million and 22 months to get here. With some more money, he could do better, he reasoned, even if it rained.

But money wasn’t easy to come by because investors had singed their hands in the hyperlocal frenzy of 2015. “As much as there was love for Dunzo, there was a sort of investor fatigue in the hyperlocal space,” said an investor, who requested anonymity.

Indeed, in the first nine months of 2015, over 45 hyperlocal startups raised more than $270 million from investors, according to research by Mint. In 2016, funds dried up and many of these companies shut shop.

Dunzo was in the market to raise capital nearly a year since January 2017. While its existing investors, Blume Ventures* and Aspada were supportive, a hyperlocal business would have had to burn far more capital than they could chip in with. Biswas was reluctant to raise smaller rounds because that would mean his attention would be away from the business.

He responded to the funding winter by charging customers a little more, controlling costs and doubling down on product enhancements. With this, he’d managed to stem losses. “We didn’t lose any money on logistics,” he told me in a phone interview on Wednesday. This is when an unexpected turn of events took place.

Also see: Monster warehouses and hyperlocal logistics: How Amazon is doubling down on delivery in India

Google, one of the largest companies in the world, came knocking. “Honestly, everybody was surprised,” said the investor quoted above. This is the first time Google has invested in an Indian startup from its balance sheet. The Sundar Pichai-led search giant’s earlier investments, in Chennai-based Freshdesk and Commonfloor from Bengaluru, were made from its investment arm Google Capital (now Capital G).

Talks with Google began nearly four months ago and ended some two weeks ago with Google investing $10 million in Dunzo in a round totalling $12 million. Google had no intentions of making the investment public but was prepared with a response nearly a week in advance in case the news leaked. Rumours were flying thick and fast. On Wednesday, VCCircle put an end to speculation and reported the investment.

But what does this really tell us about Google’s roadmap for India? The internet giant, as always, is playing its cards very close to its chest. However, based on our conversations with startups and investors, it is clear that Google is likely to become a lot more aggressive with its investments in India. “There has to be some company which is a first in this roadmap. It happened to be these guys,” said the investor quoted earlier and aware of the discussions between Google and Dunzo.

“They have been meeting other companies… there are at least half a dozen companies they’ve met recently but nothing has moved beyond the first conversation yet,” said another startup investor. As FactorDaily had pointed out when Google acquired Halli Labs, Seema Rao, who joined Google from investment banking company Avendus, has been leading several such discussions.

A Google spokesperson said: “Google Asia Pacific has invested in Dunzo. We are very energised by the Indian startup ecosystem;  the entrepreneurs and the talent pool in India and as and when we spot the right opportunity we will invest.  We have nothing else to share at this time.”

Also see: Google launches Areo, a hyper local app for food delivery and services in India

“All I know is that there’s a full-blown team between India, Singapore and the US… and they are evaluating how they are going to go deeper into the NBU angle that fit into their strategic roadmap,” said a second investor. Among the startups that Google has shown interest in is Locus, a Bengaluru startup with proprietary algorithms to make logistics operations more efficient.

The acquisition strategy is a way to get talent like it was in the Halli Labs instance. But the investment strategy is new, sources said. Rao’s role is to be the investment banker for Google’s product teams. “She’s interfacing with a lot of teams within Google and checking what the gaps are and trying to plug those with startups,” said the second investor.

Google’s investment strategy is consistent with the fact that it needs partners who will give them data and that is relevant to its ambitions to onboard and have a disproportionate share among the next billion computing users in the world — an objective that is among the top priorities for CEO Pichai (in the lead image of this story). “They are going to focus on the areas that will get you those data sets faster. That’s why education, healthcare, local commerce, local search… which are all relevant to the macro Google story,” said the first investor.

The Economic Times reported that Google International LLC had raised its investment by Rs 1,204 crore in its local subsidiary Google India Pvt Ltd this year. The newspaper described the tranche as “its largest and only investment in the unit since 2008, when it infused Rs 26 crore in it”.

Google anticipates that by 2021, there will be over 730 million internet users in India as data and smartphones become cheaper messaging, entertainment and the need for information will grow multifold.

Also see: How Google is priming its Next Billion ambition in India

Continuing its commitment to its Next Billion Users initiative, meanwhile, at an event on Wednesday in Delhi, Google announced Android Oreo (Go Edition), an operating system optimized for India’s needs; Google Assistant, a version of Google Assistant for entry-level devices; Files Go, a utility app to manage files; Google Go, a faster and data efficient search experience; and Maps for two-wheelers.

The company has already launched a payments app called Tez, localised its global products like Maps and introduced offline features to YouTube and Maps.

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