So far in 2019, some of the world’s largest tech companies are learning a hard lesson: growth has consequences. For bike-sharing startups in China, the consequences include fields of waste and riches lost.
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Ofo, the yellow rimmed leader of the pack, picked up a massive $2.2 billion in known funding from its investors in just under five years, per Crunchbase. After flooding the streets of Beijing and other major cities in China, the company launched in the U.S. in 2017. A year later, ofo significantly scaled back its international operations in July 2018, just a few months after raising its largest $866 million Series F led by Alibaba Group. According to Technode, the company’s CEO Dai Wei was blacklisted for defaulting on debt in December 2018, and ofo denied claims of bankruptcy in a Weibo post earlier this month. Other outlets reported earlier this week that Singapore’s transportation department revoked the company’s license to operate in the country.
Mobike’s investors, on the other hand, took a different route. The company found an early exit in China-based Meituan Dianping, a company which has eyes on the mobility space, after raising $928 million. Its investors included the illustrious WeChat owner, Tencent, and Singapore’s Temasek. According to reports, Meituan Dianping recently introduced fees for bikes parked outside of specified zones. Lesser-known Bluegogo was acquired by China’s ridesharing giant Didi Chuxing in January 2018 after experiencing its own tough times in 2017. Both companies have reportedly doubled rental fares in Beijing to combat losses. Take the revenue where you can get it when you’re in a cash-burning business like bike sharing.
Despite the signs that companies seem to be focused on major damage control, reports indicate that Shanghai-based Hellobike, which is backed by Alibaba’s fintech affiliate Ant Financial, is looking to raise up to $500 million more. We’ll see if its investors think there is a light at the end of this tunnel, or if piles of bicycles and lines of disgruntled customers and employees block the way.
Illustration Credit: Li-Anne Dias