After Series E…
By and large, the financing activities paused (as described in part 2) in the bike-sharing space. And the $3 billion valuation for both mobike and ofo was not attractive. Capital markets were developing way ahead of the business.
What is more, the economic model was still in the “testing stage” (to put it nicely).
M&A?
The most obvious way to end the war and to make the industry profitable was a merger between ofo and mobike.
The investors were familiar with the merger between Didi and Kuaidi in 2015, with Tencent-backed Didi’s name surviving.
Similar talks must have been held for several times, especially in the summer of 2017. But before a merger, there would probably be a winner.
Investors from both sides probably have been talked about this privately for long. In June 2017, a discussion between Xiaohu Zhu (GSR Ventures), ofo’s backer from Series A, and Pony Ma (Tencent), mobike’s lead investors for Series D&E, was leaked and posted on the internet.
They were trying to claim ofo and mobike as the No.1 bike-sharing company respectively.
Meanwhile, both CEOs were saying a merger was not possible (6/29).
The first public comments from investors on the merger might be in September 2017 when Xiaohu Zhu said a merger is the way to profitability.
ofo CEO vs. Investors
Didi (with veto power) sent a team to ofo in July 2017, including an executive vice president.
In September 2017, ofo launched its mini-program on WeChat (said to be directed by Didi’s team), which made Ant Financial shocked and angry. (Ant Financial’s Alipay and WeChat’s WePay are the duopoly in mobile payment)
It was said that Ant Financial asked ofo to close its mini-program, then Ant Financial would provide additional financing.
Didi’s team lost their access at ofo in November 2017. And ofo’s mini-program became not available anymore.
At the end of 2017, ofo CEO had the last conversation with Xiaohu Zhu (GSR Ventures) about the merger. One month after the last attempt, Xiaohu Zhu sold his position to Ali, together with his veto power.
At the beginning of 2018…
several things became clear:
-
- Youon merged with Hellobike, with the help from Ant Financial; with further financing of $350 million from Ant Financial, it would be a solid No.3 player in the space
- Alibaba got the power it wanted in ofo (to counter Didi/Tencent)
- To some extent, mobike and ofo are offering an alternative to Didi’s ride-hailing services, especially short-distance rides; they also wanted to march into the broader ride-sharing space
- Didi acquired bluegogo and planned to operate an independent department for shared bikes
Then…
Alibaba led a Series F of $866 million for ofo in March 2018.
Meituan acquired mobike for $2.7 billion in April 2018.
Alibaba led a round of nearly $700 million for Hellobike in April 2018.
In fact, Alibaba has bought out Didi’s controlling position from ofo and made Hellobike its main force in bike-sharing.
The duopoly fueled by capital was again overpowered by capital.
Read more on Hellobike (June 2018)