Bike sharing start-ups vie for fundraising schemes
- By Wu Jin
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E-mail China.org.cn, February 27, 2017
The war between MoBike and ofo follows a new round of fundraising frenzies among bike sharing start-ups in China.
On Feb. 21 this year, MoBike announced an equity investment from Singapore based Temasek Holdings, which has enabled its funding to go beyond US$300 million in total since the beginning of 2017.
However, a day later, ofo declared its cooperation with China Telecom and Huawei, China's two leading telecommunication providers, for exploring bike sharing experiences with the support of the Narrow Band Internet of Things (NB-IoT).
During the last few weeks, MoBike has disclosed three rounds of venture capital, while, ofo has voiced none.
Since its establishment in 2015, MoBike has completed nine rounds of funds from prominent investors including Sinovation Ventures, Sequoia Capital China, Hillhouse Capital Group, Tencent and Foxconn.
"We'll never stop finding investors because we are yet to establish a profitable model," said Wang Xiaofeng, CEO of MoBike. "We need money to help us survive and endure," he added.
MoBike's relentless efforts in reaching top fund firms may place considerable pressure on ofo's investors, making them weigh carefully about the pros and cons on whether to join the intensifying fundraising battle.
However, the rivalry seems never to stop. On Feb. 9, this year, the Wall Street Journal unclosed that ofo will receive a fund of US$150 million, but the second largest bike sharing provider in China by size declined to comment on the report.
In the last round of fundraising on Oct., 2016, ofo rallied a prestigious lineup of business magnates such as DIDI Chuxing and Xiaomi Technology.
Despite MoBike's leading role in fundraising, ofo is managing to get an upper hand by accelerating market expansion. It launched its bicycles in 11 cities in 10 days in January, giving it a 14-city lead on Mobike's coverage which is reportedly 21 in total by Feb. 22, 2017. Moreover, it issues discounts, coupons and random free rides to win the favor of users.
The competition has intensified beyond MoBike and ofo in the bike sharing market. However, in the ruthless market, smaller pedaling start-ups have experienced grimmer challenges than those that may face the bigger ones.
One of the best-known cases is the Kala bicycles launched in Putian, Fujian Province. Having been refused several times ahead of securing the first capital influx, Kala Bike contracted its first bill with a supply of 5,000 bikes in the beginning of this year. It launched more than 600 bikes between Jan. and Feb., but only to see the investment go sour with the loss of more than 400 cycles.
The loss of bicycles for large companies supported by gigantic investments is a smaller problem than for the small companies involved in life or death struggles.
Industrial insiders have compared the bike sharing market with the previous battle of the ride hailing APPs of Didi and Kauidi which ended up with acquisition.
"After contending for users and platforms, MoBike and ofo may see their futures depend on the running of supply chains," said Huang Gang, director of China Supply Chain Alliance.
The rivals have two different supply chains, among which, Mobike has a designated supply from Foxconn, while, ofo partners with a wider range of homegrown manufacturers, such as, Pigeon and Phoenix.
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