Bike Share Startups Rolling in the Money
We write about all types of disruptive technologies on Nanalyze. Disruptive sounds like a buzzword—and, let’s be honest, it kind of is at this point—but it refers to technologies that promise to radically change how we live and work in the future. One of those is transportation. We’ve hit you with all sorts of topics, from self-driving buses to flying cars to electric motorcycles. So what would you say is the hottest tech topic in transportation this year? If you said, “Tesla,” then you must write for Futurism.com. The correct answer—at least for the purposes of this article—is bike share startups.
Yes, bikes as in bicycles, as in two-wheeled contraptions that usually require some effort on your part for propulsion. Before you say “that’s so 19th century” consider this: Two of China’s newest unicorns—companies valued at $1 billion or more—just this year are bike share startups. Shanghai-based Mobike raised a whopping $600 million in a Series E earlier this month to bring its valuation somewhere in the $3 billion neighborhood, with total disclosed investments of $925 million. Meanwhile, chief rival ofo out of Beijing joined the unicorn club earlier this year after a $450 million Series D in March. Total disclosed funding is $580 million.
Big Money and Big Investors in Bike Share
Together these two bike share heavyweights have raised $1.265 billion in 2017 alone—not to mention three undisclosed rounds between the pair. Add last year’s funding, and we’re talking a half-billion dollars in money. For bicycles. That’s as much money as all the VC funding for NewSpace startups in 2016, which usually involves launching really expensive isht into outer space. Even a second-tier bike share startup like bluegogo out of somewhere called Tianjin has netted nearly $88 million, with $58 million coming from a Series A in February.
You might also be surprised to learn about who is throwing that kind of money at these bike share startups. It’s certainly not Lance Armstrong or Giant Bikes. We’re seeing serious technology companies back startups like Mobike and ofo. Chinese internet giant Tencent Holdings led the Series E for Mobike, as well as an undisclosed Series D in February. Sequoia Capital, one of the top tech VC firms on the planet, is also pouring millions into Mobike. It has participated in three of the four funding rounds held by Mobike in the last six months. In the other corner, ofo counts Ant Financial, Alibaba’s financial affiliate, and ride-sharing company Didi Chuxingas as key investors. Alibaba is basically the Amazon of China, while Didi Chuxighas is China’s version of Uber, but with far fewer lawsuits and allegations of sexual harassment.
Bike Share Startups Unleashed
Most of you reading this are probably familiar with the typical bike-sharing programs in the United States or Europe, where you usually set up an account online that is connected to a credit card. You then swipe said credit card at a bike docking station to unlock a bicycle. The rest of your day is usually spent searching for the next docking station. There’s usually an app that helps you locate nearby stations, where there’s often no space to park.
What Mobike, ofo and all of these other Chinese companies have done is unleash the bike. No bike dock station required. GPS-enabled bicycles are self-locking and are usually checked out via an app. Most users can pay through Alipay (as in Alibaba) or the ubiquitous WeChat app, China’s version of Apple Pay, Facebook, Messenger and a half-dozen other social media-type programs all wrapped into one. Mobike would seem to have the advantage here, as Tencent is the company that developed WeChat, which has somewhere in the neighborhood of a billion users worldwide.
Bike Share Startups Go High Tech
By now you’re probably thinking, “OK, GPS on bicycles and cool apps. So what?” For starters, bike share startups like Mobike consider themselves technology companies first. Founded only last year, Mobike is probably the first of these companies to play up its Internet of Things connectivity. In some ways, it is a mobile IoT comparable to your home system. However, as Mobike founder Joe Xia told TechNode, Mobike is an IoT business that connects many people to a single object versus many objects to one person. This allows the company to collect loads of data about people and movement all day long. We would think this sort of connectivity will be significant to integrate bike share programs in the smart cities of the future—a topic we want to return in the coming months.
One topic that we have been talking about for quite a while on Nanalyze is artificial intelligence (AI). And, yes, there’s apparently AI in the bike share industry. Mobike is again taking the lead here with its Magic Cube platform, which is an advanced technology that merges Rubik’s Cube and a Magic 8 Ball. OK, it might be a bit more sophisticated than that. Mobike says its Magic Cube platform, leveraging the data collected by its connected bikes, can make accurate forecasts of supply and demand. TechNode reported that Magic Cube helps guide the company in bike dispatching, scheduling and operation. The AI is also deployed to help fix the ongoing problem of illegal parking.
TechCrunch noted that Mobike is using its data analytics to work with city governments to help with city planning, maintenance and operations. The company showcased the power of Magic Cube and its data in a report released in May that highlighted travel trends during a three-day holiday weekend in China. Insights included the top five travel destinations based on where members registered their usage outside their home base. Some obvious uses for this sort of data include travel planning and marketing.
And at least one London-based company, Stage Intelligence, has emerged that claims it uses artificial intelligence to help bike share companies manage their inventory. Its platform, BICO, employs algorithms to predict demands based on a number of factors, including weather, season, events, holidays and many others. The service seems geared toward systems that use docking stations.
The Rise and Fall of Bike Share Startups
Mobike and its cohorts are beginning to venture beyond China and giving rise to copycats in other countries.
Right about now, 1,000 Mobikes should be hitting the roads of Manchester and Salford in Britain, with plans to be in 200 cities by the end of the year. In May, ofo rolled out 6,000 of its yellow bikes in Singapore, with a reported 100,000 registered users. Mobike claims 100 million users worldwide. And China Daily reported, based on stats from the China E-Commerce Research Center, there were nearly 19 millions users nationwide at the end of 2016. That number is expected to rise to 50 million by the end of 2017. Just 1.3 billion more people to go.
Meanwhile, bike share startups are rolling into other countries. For example, a Silicon Valley startup called LimeBike rode away with $12 million in funding this past March. Andreessen Horowitz, another key VC firm in tech, led the Series A round.
Looks like there’s no slowing down on-demand bike share, right? Well, it’s not all hands-free riding just yet. Several Chinese bike share startups have already crashed. For instance, a company named after a god-like monkey king, Wukong, went out of business after five months. You’ve never seen a Chinese god-like monkey king before? Check this thing out:
The name didn’t help much though because about 90 percent of its 1,200 bicycles went AWOL. Apparently the company skimped on the lock technology. It’s also unclear whether dockless bikes will be accepted outside of China. Bluegogo’s launch in San Francisco sputtered. New York City, at times, has turned into a Mad Max battleground between cyclists, drivers and pedestrians. Add a bunch of untethered bikes parked willy nilly—as they are throughout Chinese cities—and the Big Apple may become unhinged.
Still, it’s hard not to be intrigued about where this is all going. The intense competition is benefiting customers in terms of costs (most rides are less than a buck) and new features, such as phone chargers and internet ports. We wouldn’t be surprised to see some consolidation not too far down the road, as the pace of expansion (not to mention investment) seems unsustainable. It would also be great to watch Mobike and ofo merge, creating a company called Mofo.
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