Venture

Morning Report: Billions For Bike Sharing Seems A Bit Frothy

Morning Report: Whatever happened to efficient growth and cashflow management?

Bike sharing startup Ofo raised a $700 million Series E this week to fuel expansion. As the Crunchbase Daily noted this morning, the new capital “comes on the heels of a $450 million March investment.”

If you can’t help but find that a bit odd, things are even more surreal than you thought.

(Sidenote before the snark: Bike sharing could be a simply massive business not only in Asia, where Ofo is based, but around the world. Our point today is that capital sources of various stripes are investing at a pace that seems a touch out-of-touch.)

Ofo by itself has raised a staggering $1.28 billion to-date. If you sum just the firm’s two latest rounds, some $1.15 billion of the total came just this year, or 89 percent. That total and timeframe works out to $6.18 million per day so far in 2017.

But Ofo has competition, notably from Mobike, another China-based startup. Mobike itself raised a $600 million Series E in June. Its total capital raise to date is $925 million. The two combined have raised over $2 billion for bike sharing, all of it in the last 12 months.

There are other players in the space, as the media has reported. Rivals include bluegogo, another player in China, flush with $58.24 million in total capital raised, and LimeBike, based in the United States, with a comparatively modest $12 million in raised capital.

Why two dueling bike sharing companies needed to raise over $2 billion in under a year isn’t clear. This feels a bit like the FanDuel-DraftKings fight that led to massive losses and the need to merge.

There are more positive takes out there — including this from my friend and former colleague Jon Russell — but I can’t shake the idea that raising over $1 billion in a half-year for what must work out to low-margin bike sharing is probably not conservative.

From the Crunchbase Daily:

Ofo raises $700M for bike sharing

  • Big bucks are going into bike sharing. Beijing-based Ofo announced that it has raised a $700 million Series E funding round to fuel global expansion of its dockless bike-share system. Alibaba, Hony Capital and CITIC Private Equity led the round, which comes on the heels of a $450 million March investment.

Felix Capital closes $150M second fund

  • Felix Capital, a London-based VC that pitches itself as a “venture capital firm for the creative class,” has closed on $150 million for a second fund that will focus primarily on early stage startups in Europe and the U.S.

Funding flows to remote workforce startups

  • Your startup may be headquartered out of San Francisco, but your employees don’t have to be. A Crunchbase News analysis found at least 23 venture-backed companies have a majority-remote workforce, including two well-known unicorns, Github and Automattic. In other news, we examine the aftermath of Blue Apron’s IPO and consider whether public investors are less willing to assign tech company multiples to non-tech stocks.

iStock / Pavel1964

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