What do you do when your closest rival raises a record financing round? Complete a larger fundraising and set a new record, of course.
That’s what Beijing-based bike sharing company ofo Inc. just did. A few weeks after competitor Mobike raised US$600 million, ofo announced today that it has raised more than US$700 million led by existing investors Alibaba Group Holding and CITIC Private Equity, along with new investor Hony Capital.
Existing investors Didi Chuxing and DST Global also participated in the series E round. In an announcement, ofo said that it is now the highest valued bike sharing company in the world, without disclosing how much it is currently valued at. The company had reportedly been seeking a valuation of about US$3 billion in its latest funding round.
The intense rivalry between the two bike rental firms is starting to look increasingly like a battle between two of China’s largest tech firms: Alibaba and Tencent, which have led the most recent massive rounds. Bot Ofo and Mobike’s new rounds, totaling US$1.3 billion, were mostly from their existing investors with very little fresh capital from new investors.
Billions For Bikes: A Short History Of Funding Rounds
"ofo has redefined short-distance travel and let more people enjoy a low-carbon lifestyle," said Joseph Tsai, vice chairman of Alibaba. "Alibaba thinks highly of ofo’s leading position in the industry and its open platform strategy."
The massive financing rounds and extraordinary valuations for such young start-ups – ofo was founded in 2014 while Mobike launched in 2015 – have led observers to question whether bike sharing operators can fulfill their investors’ lofty expectations. Some also wonder if the two companies will eventually merge, similarly to ride-hailing services Didi Dache and Kuaidi Dache, as well as Didi Chuxing and Uber China.
But current events point to a lasting, and possibly even more aggressive tug of war. Besides raising a tonne of money, both ofo and Mobike have recently launched ambitious global expansion campaigns.
Ofo aims to have 20 million bikes deployed in 20 countries by the end of this year. It currently has 6.5 million bikes in 150 cities. Mobike, meanwhile, plans expansion into 200 cities globally by the end of the year. It currently operates more than five million smart bikes used by over 20 million riders daily.