China's leading rental bike companies are shifting up the gears in China and racing to raise more capital in a bid to leave the chasing peloton even further behind.
Beijing Mobike Technology announced on Friday that it had raised a further $600 million from investors, led by Tencent Holdings Ltd, to help it swallow up other bike-sharing rivals and expand its services overseas.
It is the second private fundraising that Mobike has secured from internet and social mobile giant Tencent this year. The Chinese unicorn also raised $215 million in January.
Besides Tencent, existing investors Sequoia, TPG, and Hillhouse Capital plus new investors BOCOM International, ICBC International and asset management firm Farallon Capital also joined the funding, the company said in Friday's statement. China Renaissance was the exclusive financial advisor on the deal.
While a valuation for Mobike was not disclosed, local media Jiemian reported that the company had been worth Rmb10.5 billion ($1.54 billion) following the previous series-D round.
Mobike plans to use the money raised to add more smart bicycles to its five million-strong fleet of bikes and encourage other forms of technological innovation. It aims to double the number of cities in which its bicycles are available by the end of the year and to invest in the Internet-of-Things and artificial intelligence technology, the company said.
“We are pleased to secure the continued support of leading investors who share our vision for the transformative potential of the Mobike platform,” said chief executive and co-founder Davis Wang in the statement. “Our platform is already revolutionising how people move in cities around the world; transforming the urban transportation landscape."
Despite increasing car ownership in China, bikes remain popular among city commuters faced with long walks after taking public transport. This has created dozens of private bike-sharing operators such as Mobike, which allows users to scan QR codes on their GPS-enabled bicycles to unlock, ride and park anywhere they like.
Wannabe riders can pay Rmb1 ($0.14) for a 30-minute ride through Mobike’s mobile app, while the app also charges Rmb299 for a deposit fee.
The mobike-sharing sector, which only emerged in 2015, is drawing billions of dollars from investors. According to a calculation by FinanceAsia, more than 30 institutional investors have invested in at least 24 bike-sharing start-ups in the country, each hoping that their targets will win the battle.
Leading two
The sector's two leading firms appear to be Mobike and Ofo, which have drawn in as much as $1.6 billion of investment in the last one and half years, lifting both companies into the unicorn class – that category of start-up company worth more than $1 billion. And both have a bigger ambition: to go abroad.
First launched in Shanghai in April last year, Beijing-based Mobike has raised up to $925 million from Tencent and other private equity investors. Ofo, on the other hand, landed $450 million in March in a series-D round of funding from a range of investors including Chinese taxi-sharing giant Didi Chuxing. A month later, Ofo launched a trial in Cambridge, England, making it the first Chinese bike-sharing company to hit streets outside China.
After making Singapore its first stop outside of China, Mobike is also expanding into the UK. The company said it would start services in the UK with 1,000 pilot bikes in Manchester and Salford from June. Mobike, whose five million bikes are currently mostly in China, said on Friday that it is looking to operate in 200 cities by the end of this year.
