The Battle of the Bike Share Behemoths

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bike share Vancouver - don't forget your hairnet and mandatory helmet

Bike share might be slow in taking off in in Ottawa, but in other parts of the world it is serious business. There is currently a bit of showdown happening in China between the two main bike share behemoths in the bike share world: Ofo and Mobike.

Ofo

The two largest Chinese bike share companies are looking to expand. Ofo just announced it will start a bike share system with 500 bikes in Cambridge, UK. In February 2017, Ofo raised no less than 450 million USD. It is also working on the introduction of bike shares in Silicon Valley and Singapore. The latter one just received 1000 bikes. The Chinese company’s bikes are currently available in 34 Chinese cities with 3 million bike riders a day. Ofo bikes can be left in any place, because they are enabled with smart technology. Tracking is enabled through GPS, and the bikes can be unlocked through a cell phone. I have seen a similar system by Deutsche Bahn (German Railways) in Munich a number of years ago, where you could leave your bike anywhere. ofo is backed by Didi and Xiaomi and has around 20 million users.

Mobike

Ofo is not the only provider that thinks big. Mobike is another behemoth. Global Private equity company Warburg Pincus from New York has $ 44 billion in assets under management, invested in 140 companies. In January they closed another round of US$215 million Series D financing for Mobike to expand with partners such as Chinese internet giant Tencent, China’s largest travel company Ctrip (which also owns Skyscanner btw) , private equity firm TPG, China’s hotel operator Huazhu Hotels Group, Sequoia China and Hillhouse Capital. Mobike has 10 million users.

Wealth of data from bike share users

Such numbers give the owners a wealth of data. Think ads along busy bike routes or retail that can profit from bikes: bikes need little space to stop and park after all.

Bike shares are becoming an integral part of the shared economy. “Why own?”, many people appear to think. When I used a bike share in Vancouver last fall, while staying in an AirBNB apartment, I thought the same thing. But I can’t entirely figure out the business model yet.

Sources:

http://www.warburgpincus.com/content/uploads/2017/01/Press-Release-Mobike-Announces-Closing-of-US215-Million-Series-D-Financing.pdf

Verkeersnet.nl

http://mobike.com/global/

http://www.ofo.so/

https://www.techinasia.com/china-ofo-bike-sharing-unicorn-with-major-funding

 

4 Comments

  1. Every bike share project that came in front of the Cycling Advisory Committee in Kitchener was looking to leverage government funding and corporate sponsorship of some kind. None were ever fully user supported.

    • I have read articles in the past on how difficult it is to make it viable. On the other hand, public transport doesn’t stand on its own either. Ideally, the two services are integrated, which is fairly well done in the Netherlands (the last mile to the destination) where the Dutch railways are running a bike share system where they have to add over a 1000 bikes a year currently to keep up with demand. Over 50% of travellers arrive at a train station by bike. They often need some transport option at the other end too. Another way to make it work appears having it paid by advertising, like European advertising giant JCDecaux does. I don’t know enough of it to have an expert opinion.

      • I think the other way to look at it is that all transportation systems are subsidized. If we look at road networks, there is more government subsidy/user than any other. The best public transit systems are heavily subsidized unlike Toronto’s which suffers from an over-reliance on fares. So, what’s wrong with subsidizing bike share?

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