China’s Bike Rental Firms Mobike, ofo Are Raising Nearly $1 Billion In Fresh Funding

As city streets in China become a theater for the current venture capital-fueled bike rental start-up frenzy, the two biggest bike rental companies in the country, Shanghai-based Mobike and Beijing-based ofo, are both raising massive new financing rounds totaling nearly US$1 billion.

Mobike is raising a new round worth several hundred million U.S. dollars, which would be its series E round 14 months after its official launch. The round would value the young start-up at as much as US$3 billion. While at the same time, ofo is looking to raise a maximum of US$500 million at US$3 billion in valuation, according to Chinese media reports citing insiders.

Both Mobike and ofo did not immediately respond to inquiries from China Money Network to comment on the reports.

"The company is growing rapidly, and investment risks have actually been lowered because of its expanding scale," said Julian Cheng, managing director and co-head of China at Warburg Pincus, which is a major investors in Mobike, told Chinese media in a recent interview.

Cheng said that Chinese bike rental companies are addressing a massive market, which could be as many as 80 million bicycles on the streets if taking China’s public bicycle totals as a reference. Bike rental services will continue to penetrate smaller cities and more people will begin to use the service, while the bikes can become a platform to introduce various services to end users, Cheng explained why investors are enthusiastic about investing in bike rental companies.

Last week, Mobike said it would launch its services in the British cities of Manchester and Salford later this month, after it expanded to Singapore in March. The company said two months ago that it was recording an average of over 20 million rides every day from the 3.65 million smart bikes it operates across over 50 cities in China.

Mobike’s major investors include Singapore’s state investment firm Temasek Holdings, Chinese investment firm Hillhouse Capital, Tencent Holdings Ltd., Foxconn Technology Group, Warburg Pincus, Ctrip, TPG and Chinese hotel operator Huazhu Hotels Group.

ofo’s investors include DST Global, Didi Chuxing, CITIC Private Equity, Coatue Management, Xiaomi Inc., London-based technology investment company Atomico and China’s Macrolink Group.