There’s now more than 8 million bicycles in Beijing, that’s a fact!
Over the last 12 months, bikesharing companies have raised over $6 billion dollars in equity financing, with an array of startups rapidly deploying this capital by rolling out services globally. Much of this capital has gone to a select few Chinese companies – Ofo and Mobike – which have quickly moved beyond China into markets in Europe, Singapore and the US.
There is little differentiation in the offering of these companies, creating a low barrier to entry and high levels of competition, where deep pockets and rapid deployment have been the routes to success. Nearly rans have had difficulties keeping pace, with many forced to consolidate or die. Some, such as Youon Bike and Hellobike, have merged to survive, whilst others, such as Bluegogo, have been acquired by Didi Chuxing – creating yet another entrant into this crowded market in the form of one of the world’s most valuable startups.
From this brief introduction of the current state of affairs in the sector, it is clear that despite a year of growth for winners in the bikesharing market, there have been significant growing pains in the sector holistically. As well as the high competition levels, in the race to deploy globally, there has been little communication with city/municipal services to manage the influx of dockless bikes, leading to supply often far exceeding demand. Because of the lack of regulatory oversight and rapid deployment, the streets of many busy urban cities worldwide are littered with discarded bikes, amassing in areas that do not necessarily best serve the respective city’s infrastructure or citizens. This saturation has reached the point where cities are now fighting back, exemplified by two major Chinese cities (Guangzhou and Shenzhen) refusing Didi’s application to deploy dockless bikes.
These difficulties have led to further innovation from exploring new technologies and partnerships, to models of integrated deployment within cities. For example, Jump Bikes became the first dockless electric bike (e-bike) service to launch, as well as striking a partnership deal with Uber to allow app users to see the location of Jump bikes throughout San Francisco.
This integration is not only a boon to both companies, it is also perhaps a herald of a future solution to the multi-modal transportation conundrum. With aggregated data and locational information, the end-consumer has increased utility in terms of going from A to B, and on a macro level, there is a more efficient allocation of transportation resources for first and last mile logistics. If such partnerships could then begin to develop between these TNCs and with city municipalities, there would be a significant improvement in the provision of equitable transportation on a city-wide level.
In the past year, certain innovations have driven the bikesharing industry forwards. E-bikes (and e-scooters) appear to be the latest attractive opportunity for venture capital within this space, as shown by dockless e-scooter startup Bird, which raised $115 million in funding via back-to-back A and B round funding in February/March. But although technology has improved, there remains similar regulatory issues, highlighted in the wrangling between the startup and the Santa Monica authorities regarding the ubiquity of scooters, often in the way of pedestrians.
It remains to be seen if there will be a continuation of partnerships between startups focused on different modes of transport, let alone a more productive relationship between private sector startups and municipal authorities. Despite this uncertainty, if there is one thing learned from the example of China’s “bikesharing 1.0” over the past year, it is that an integrated approach taking into account the needs of others in transportation (both public and private entities) is both sensible in the short-term, and perhaps profitable in the long-term for the second wave of (e)bikesharing startups.