Alibaba Group Holding Ltd has funded the Beijing-based-Bike-sharing firm Ofo with $866 million. According to Ofo, the amount raised is the largest amount that the bike-sharing start-up has ever made since its inception in 2014.
Apart from Alibaba, other firms that comprise of both equity and debt financing including Haofeng Group, Tianhe Capital, and Junli Capital have also participated in the fundraising for Ofo. The company also had previous investors including DidiChuxing that has already incorporated Ofo’s features into its own platform to facilitate bike-sharing. At the same time, Mobike announced recently that it has plans to launch a car-sharing platform before end of the year.
The fund-drive comes at the time when Ofo and its rival Mobike are competitively striving to expand overseas as well as outdoing each other by launching new products and services within the region.
Ofo’s latest new finance is intended to fuel its rigorous tactics and strategies to outdoits largest rival Mobike. Last year, Alibaba Group also contributed $700 million in Ofo’s Series E round that was launched a month after Mobike revealed that it had obtained $600 million in Series E supported by Tencent.
According to CEO Dai Wei of Ofo, the company is transitioning from a rapid growth phase to a stage that requires high-quality development as it grows into a global leader in the space.Ofo intends to be customer-oriented and to become the leading firm in the bike-sharing sector by focusing on technological innovation and efficient operations across the globe.
Ofo’s bike-sharing platform currently has more than 200 million subscribers and generates about 32 million transactions on a single day. The company is over $1 billion in value and if combined together with Mobikeit makes about 90% of the bike-sharing market in China. The two firms are also expanding to other regions across the globe.
One of the greatest challenges facing the bike-sharing sector globally is purportedly lack of sufficient cash that each company requires to sustain the high cost of rivalling one another, hence making it difficult for new bike-sharing start-ups to penetrate the market.
In China, the bike-sharing market has about 60 startups though the market bubble began collapsing recently due to the insufficient resources to invest in the latest technology. For instance, Bluegogo sold off its operations to Didi after it ran out of cash last year.