China’s bike-sharing unicorns may be forced to merge with rivals to ensure survival
Bike-sharing became a hot sector in China after investors pumped billions into start-ups, but competitors face a stark choice as the money begins to dry up
During its first year in business, Bluegogo carpeted China’s major cities with more than 600,000 bicycles, catapulting it to No. 3 among the country’s bike-sharing firms.
About 20 million people signed up to rent a bike for the equivalent of a few US cents per hour. The Tianjin-based start-up received more than 400 million yuan (US$60 million) in venture capital funding before it went belly-up. Bluegogo’s offices are shut, the founder Li Gang has yet to speak to media about the closure, and questions remain over the rider deposits placed with the company.
From its peak of about 100 companies offering similar services, there are now just three major providers with deep-pocketed investors that can potentially survive another price war.
“The gold rush is over,” said Shi Rui, an analyst with Beijing-based consultancy iResearch. “Smaller companies won’t survive unless they get more funding. As investors become more cautious, merging with a well-capitalised bigger player can increase their chances of survival.”
