Bike-sharing firm ofo reportedly in talks to raise one billion US dollars, led by SoftBank

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Chinese bike-sharing startup ofo is in talks to raise one billion US dollars in a new funding round led by Japan's SoftBank, people familiar with the matter said. It would be the largest fund-raising in the nation's bike-sharing business.

Didi Chuxing, which counts SoftBank as an investor, could join ofo's new fundraising round, said insiders. And ofo could reach a valuation of close to three billion US dollars after the funding, one of the sources added.

Mobike and ofo, China's two largest bike-sharing startups, have each raised over one billion US dollars since late last year in a cash war to expand market share at home and overseas.

In fact, ofo is seeking fresh capital less than a month after raising more than 700 million US dollars from investors led by Alibaba and two others, following rival Mobike, which in June announced a 600 million-US dollar investment led by Tencent.

China's bike-sharing market is booming. /VCG Photo

The latest ofo investment plan has not been finalized, the sources said. And ofo did not disclose its valuation in the last funding round as well. Dai Wei, ofo's founder and CEO, had said in April that the firm was valued at upwards of two billion US dollars.

SoftBank and Didi declined to comment.

Expansion plans

Mobike's valuation reached around 2.7 billion US dollars after the June funding round, according to three sources close to the startup. And it is also open to raising new money, one of them added.

Earlier this month, ofo said it plans to deploy 20 million bikes and expand its service to 200 cities in 20 countries by the end of 2017. It "has connected over 6.5 million bikes to riders in 150 cities across five countries, generating more than 25 million transactions daily," said ofo.

Mobike has said it has over five million bikes in more than 100 cities around the world. The company said on Wednesday it would start offering bike rides in Italy.

Possible concerns

The rapid fundraising and broad expansion plans of the bike-sharing companies are worrying some investors.

"We hope they (the recent funding rounds) wouldn't lead to endless bike piling and price competition," said a venture capitalist who invests in China's bike-sharing apps.

Investors are worried about China's bike-sharing market. /VCG Photo

China currently has at least ten operational bike-sharing apps. Local regulators have raised concerns that bikes could add to congestion on the streets. The bikes are also easily stolen or vandalized, adding extra costs to the companies.

Influence

Didi, an investor in ofo, has been increasing its influence at the company.

Three of its senior executives joined ofo this week. One of them, Fu Qiang, a former senior vice-president of Didi, was named executive president of ofo, but the company did not confirm the hiring of the other two.

For SoftBank, which recently launched a near 100 billion-US dollar technology fund, an investment in ofo would be another bet on China's sharing-based economy that has already attracted billions in venture capital.

(Source: Reuters)