Beijing based bike-sharing startup Ofo has raised whopping $866 million in a new funding round led by Chinese giant Alibaba Group. The funding round consisted of debt as well as equity financing. The other participants in the round included Ant financial (Alibaba’s subsidiary company) Haofeng Group, Tianhe Capital and Junli Capital.
This is the second time that Alibaba has invested in Ofo in less than a year. The Chinese giant, which is popularly known for its e-commerce services, also led $700 million round in the bike-sharing startup last year.
The latest funding round will most certainly give a huge boost to Ofo’s pursuit to stay ahead of its main rival Mobike. The Tencent backed Mobike along with Ofo (backed by Alibaba) are the two largest players in China’s highly lucrative bike-sharing market. Both startups are unicorns, boosting valuation of more than billion dollars.
However, the two companies are apparently struggling to turn profitable. The high cash burn rate and wafer-thin margins are proving to be huge bane for both the high profile startups. This has constantly driven these companies to look up for huge funding rounds and have until now raised multiple round of funding.
Ofo and Mobike’s other competitors, on other hand, have often struggled to raise funds. As a result, over the last one year or so scores of Chinese bike-sharing startup were forced to shut down their shutters. One of the high profile causalities was Bluegogo, which was forced to sell part of its business to Didi Chuxing in order to continue its operation.
There have been also rumors that Ofo and Mobike may merge together in a bid to down trim down their growing losses. However, Alibaba and Tencent are reportedly against this deal as both companies are eager to enjoy the largest pie in China’s bike-sharing market.