Looking for Liquidity? 🤔
It's only money? 💵 🤔😱
"Ofo, the Alibaba-backed bike-sharing service, has “immense” cash flow problems and has considered applying for bankruptcy, according to the company’s founder. Dockless bike-sharing companies, including Ofo and its main rival Mobike, have rolled out more than 20m bikes in the past two years in China and abroad. With its yellow dockless bikes, Ofo — which has raised more than $2.2bn since it was founded in 2014 — exemplified the Chinese start-up model of growing quickly by raising money and burning through cash. Earlier this year, an industry insider estimated that rival Mobike spent $50m a month, while Ofo burnt through roughly $25m.
But cash flow problems for the company have become acute, Ofo founder Dai Wei wrote in a letter to employees on Wednesday. “I’ve thought countless times . . . of even dissolving the company and applying for bankruptcy,” he said. “For the whole of this year we’ve borne immense cash flow pressure. Returning deposits to users, paying debts to suppliers, in order to keep the company running we have to turn every renminbi into three.” Millions of Chinese Ofo users have applied for refunds on their Rmb99 ($14) deposits, which the company is trying to process online.
On Wednesday, when a Financial Times reporter applied for a refund, more than 10m users were already in the virtual queue. Mr Dai attributed the company’s financial position to “not being able to correctly assess the changing external environment from the end of last year”. Bao Jun, an analyst at market research firm iResearch, said: “The whole bike-sharing industry has weakened. Across the economy, investors are more cautious.” Mobike was bought out by food delivery giant Meituan in April of this year at an enterprise value of roughly $3.7bn, while fellow bike-sharing rival Bluegogo was brought back from bankruptcy after it was acquired by ride-sharing company Didi Chuxing in January for an undisclosed amount. Didi was reportedly in talks to buy Ofo in August. But Ernan Cui of research firm Gavekal Dragonomics said it would now be difficult for Ofo to find a company to rescue it. Recommended Inside Business Tim Bradshaw Ofo’s blowout offers lesson to investors “Its shareholding structure is complex,” she said. “They have Alibaba and Didi as investors, and Didi is invested in by [Alibaba’s rival] Tencent . . . so nobody particularly supports them.”
In March of this year, Alibaba led a $866m fundraising round in Ofo, having led multiple previous investments in the company. Didi, which has also repeatedly ploughed money into Ofo, participated in a $700m fundraising round last year. Ofo is also under pressure from suppliers. In September, a bicycle manufacturer sued the start-up for $10m in unpaid bills. Previously, a bike-lock manufacturer had threatened to “freeze” the locks of 3m bicycles due to a dispute over alleged unpaid debts. Ofo later said the dispute had been resolved. Overseas, Ofo has cut back its operations in the UK by withdrawing from most locations and sacking large numbers of employees. Mobike is preparing to sell its European arm for $100m"
Meantime have fun in the sun and ride the very few remaining 'yellow peril' bikes while you can. 🚲😀🚲
23/1,000
Looking for Liquidity? 🤔
It's only money? 💵 🤔😱
"Ofo, the Alibaba-backed bike-sharing service, has “immense” cash flow problems and has considered applying for bankruptcy, according to the company’s founder. Dockless bike-sharing companies, including Ofo and its main rival Mobike, have rolled out more than 20m bikes in the past two years in China and abroad. With its yellow dockless bikes, Ofo — which has raised more than $2.2bn since it was founded in 2014 — exemplified the Chinese start-up model of growing quickly by raising money and burning through cash. Earlier this year, an industry insider estimated that rival Mobike spent $50m a month, while Ofo burnt through roughly $25m.
But cash flow problems for the company have become acute, Ofo founder Dai Wei wrote in a letter to employees on Wednesday. “I’ve thought countless times . . . of even dissolving the company and applying for bankruptcy,” he said. “For the whole of this year we’ve borne immense cash flow pressure. Returning deposits to users, paying debts to suppliers, in order to keep the company running we have to turn every renminbi into three.” Millions of Chinese Ofo users have applied for refunds on their Rmb99 ($14) deposits, which the company is trying to process online.
On Wednesday, when a Financial Times reporter applied for a refund, more than 10m users were already in the virtual queue. Mr Dai attributed the company’s financial position to “not being able to correctly assess the changing external environment from the end of last year”. Bao Jun, an analyst at market research firm iResearch, said: “The whole bike-sharing industry has weakened. Across the economy, investors are more cautious.” Mobike was bought out by food delivery giant Meituan in April of this year at an enterprise value of roughly $3.7bn, while fellow bike-sharing rival Bluegogo was brought back from bankruptcy after it was acquired by ride-sharing company Didi Chuxing in January for an undisclosed amount. Didi was reportedly in talks to buy Ofo in August. But Ernan Cui of research firm Gavekal Dragonomics said it would now be difficult for Ofo to find a company to rescue it. Recommended Inside Business Tim Bradshaw Ofo’s blowout offers lesson to investors “Its shareholding structure is complex,” she said. “They have Alibaba and Didi as investors, and Didi is invested in by [Alibaba’s rival] Tencent . . . so nobody particularly supports them.”
In March of this year, Alibaba led a $866m fundraising round in Ofo, having led multiple previous investments in the company. Didi, which has also repeatedly ploughed money into Ofo, participated in a $700m fundraising round last year. Ofo is also under pressure from suppliers. In September, a bicycle manufacturer sued the start-up for $10m in unpaid bills. Previously, a bike-lock manufacturer had threatened to “freeze” the locks of 3m bicycles due to a dispute over alleged unpaid debts. Ofo later said the dispute had been resolved. Overseas, Ofo has cut back its operations in the UK by withdrawing from most locations and sacking large numbers of employees. Mobike is preparing to sell its European arm for $100m"
Meantime have fun in the sun and ride the very few remaining 'yellow peril' bikes while you can. 🚲😀🚲
23/1,000