Chinese bike-sharing start-up Ofo on verge of bankruptcy




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ORIGINAL POST

Posted by Ed 6 mths ago
Ofo, the Alibaba-backed bike-sharing service, has “immense” cash flow problems and has considered applying for bankruptcy, according to the company’s founder.

Dockless bike-sharing companies, including Ofo and its main rival Mobike, have rolled out more than 20m bikes in the past two years in China and abroad.

With its yellow dockless bikes, Ofo — which has raised more than $2.2bn since it was founded in 2014 — exemplified the Chinese start-up model of growing quickly by raising money and burning through cash. Earlier this year, an industry insider estimated that rival Mobike spent $50m a month, while Ofo burnt through roughly $25m.

https://www.ft.com/content/4e7da9b6-037c-11e9-99df-6183d3002ee1

COMMENTS

Ed 6 mths ago
China’s Startup Bubble Runs Aground

Bike-share companies, among the hottest startups, are wiping out investors.

“It now appears bike sharing is the stupidest business, but the smartest brains of China all tried to get in,” said Wu Shenghua, founder of one of the collapsed bike-share companies. “It really now seems ridiculous.”


Afterwards, a lot of the ingenious must-not-question stuff that happened during a bubble is considered “ridiculous.”

Bike-sharing companies are just an example. With their capital-intensive, cash-burning, ride-subsidizing business model, they were, in their short lifespan, among the hottest startups in China. They’ve attracted $2 billion in venture funding in 18 months of frenzy leading into 2017. Over 40 platforms mushroomed out of the ground.

This now collapsed bike-sharing craze was based on the idea that you could survive and thrive by lending out bikes below cost, and even for free, as long as you could make it up with volume.

https://wolfstreet.com/2018/12/27/chinas-startup-bubble-runs-aground/

Ed 6 mths ago
And next up ... e-scooters...

Thinking a bit more, Bird and Lime must be consuming mountains of cash (more here and here) for investing purposes; neither, given our math, generate anything like enough cash to finance their employee costs—let alone what they are spending on new hardware. So I’d hazard that while either firm is adding markets to their portfolio, they are working to add capital to their accounts.

https://news.crunchbase.com/news/the-revenue-costs-and-margins-behind-birds-scooters/


Bird and Lime electric scooters are being vandalized, smeared with feces and set on fire by frustrated locals in Los Angeles County

Residents in Los Angeles County are vandalizing electric scooters provided by companies Bird and Lime as local officials rush to put a cap on their abundance

Los Angeles Police Department's Pacific Division has only received one report pertaining to scooter vandalism

The report resulted in an arrest that eventually led to a case that prosecutors ultimately rejected

An Instagram account called 'Bird Graveyard' has garnered a huge followings of 24,000 followers, showcasing the destruction of the scooters

A moderator of the page said that they get upwards of 100 videos submitted a day

https://www.dailymail.co.uk/news/article-6051211/Bird-Lime-electric-scooters-vandalized-Los-Angeles-County.html




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https://www.ft.com/content/26888854-fdfa-11e8-aebf-99e208d3e521

Fledgling electric scooter start-ups Bird and Lime are trying a new tactic to survive their first winter: migration. 

Wind, rain and snow in several of the companies’ markets has threatened to put a damper on their rapid growth this year, just as they are looking for new investment. 

“The seasonality is real,” said one scooter investor. “People don’t want to ride scooters in the snow.”

But the start-ups believe they have found a solution: shipping scooters from one city to another.

https://www.ft.com/content/26888854-fdfa-11e8-aebf-99e208d3e521


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