Ofo

Chinese bike-sharing startup Ofo is rumoured to be mulling a US$500 million funding round at a US$3 billion valuation, according to a report by Bloomberg.

The new funding round will bolster Ofo’s resources as it seeks to broaden its reach beyond Chinese shores — where there are over 30 bike-sharing companies — to countries such as Spain, Japan, the Philippines, France and Germany. Currently, its overseas chapters include the US, UK and Singapore.

Previously, Ofo, founded in 2013, raised several rounds from high-profile investors, including a US$130 million Series C led by Didi, a US$450 million Series D led by DST Global, and an undisclosed Series D led by Ant Financial.

This makes Ofo the highest funded bike-sharing startup in the crowded Chinese market to date. Ofo currently owns a fleet of over two million bikes, collectively logging over 400 million rides.

In Singapore, Ofo has to contend with two other bike-sharing startups — Tencent-owned Mobike and local competitor oBike. Since its launch in February 2017, Ofo claims to have registered more than 100,000 users locally; a sizeable figure, which, perhaps, can be in part attributed to its cap of S$2 (US$1.45) per trip.

But like most, if not all, bike-sharing startups, Ofo has had to tackle numerous cases of bicycle abuse by users. Some Ofo riders in Singapore have been known to chain up the bicycles or spray paint them after use to claim ownership over them; others have simply abused the bicycles in the name of vandalism.

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To stem such occurrences, Ofo now requires users to pay a S$39 (US$28) deposit. It has also added GPS capabilities and smart locks to the bicycles — add-ons which oBike and Mobike already offer. These new features put Ofo on a level-playing field with its competitors, but the new mandatory deposit may turn off users attracted to its low entry barrier (but to be fair, Mobike and oBike also require deposits).

Another murky area bike-sharing startups need to navigate is regulation. Last month, the Singapore government announced it was developing a set of regulations that would require bikes to be parked at only designated parking zones. Bikes found in violation will be towed away.

Such approaches may enforce good behaviour among bike-sharing riders, but whether user growth will stagnant because of these stringent measures remain to be seen.

That being said, Ofo’s new funding, if it comes to pass, will give it the expanded war chest it needs to deal with any expansion hurdles. Perhaps throwing monetary incentives at users the same way Grab, Uber do may be part of Ofo’s plans.

Image Credit: walkingsky / 123RF Stock Photo