Ofo Is the World’s First Bike-Sharing Unicorn
China’s bike-sharing market, now with more than 30 major competitors, has become the latest battleground for funding as some of the hottest start-ups attract the eyes of investors willing to sink in millions of dollars. Bike-sharing services allow users to search for and rent nearby bikes through a mobile application. Cities such as Beijing, Shanghai and Shenzhen, already known for massive bike populations, have seen a surge in these new services.
Last week, Ofo, one of the better-known bike-sharing platforms, announced an investment round from Ant Financial, Alibaba’s financial affiliate. Although the details of the transaction were not revealed, this isn’t the first deal Ant Financial has made with Ofo. Ant Financial, which owns China’s largest online payments platform, Alipay, had already made a strategic partnership with Ofo by providing a credit-checking service to qualify users to rent bikes. Customers who don’t qualify have to make a deposit of 99 yuan (about $14) to be able to rent a bicycle.
The announcement comes less than two months after Ofo received a $450 million series-D investment that valued the company at $1 billion. That round was led by DST Global and also included investors such as Matrix China, Citic and Didi Chuxing. It was the largest funding round for a bike-sharing company. This is a serious industry attracting large investors who expect significant growth.
Ofo’s chief rival is a start-up called Mobike. Both companies are keen to get funding and partners to expand their services beyond China. Mobike’s backers include Tencent, one of Alibaba’s biggest competitors, and tech manufacturing giant Foxconn. Tencent also owns a major mobile payments platform called WeChat Pay, which, together with Alibaba’s Alipay service, dominates the online payments industry in China. Bike-sharing alliances have been formed as they go global.
Ofo also operates its bike-sharing service in the UK, the US and Singapore, and aims to expand to 20 countries by the end of 2017 including France, Germany, Japan, the Philippines and Spain. It plans to use the new round of funding to offer services in these new markets. By partnering with Ant Financial, Ofo could also piggyback on the former’s presence in other countries including India, the Philippines and other markets in South-East Asia and potentially the US.
Two wheels are good these days in the sharing economy. Get ready to pay to pedal.
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