Ofo announces $886mln funding round led by Alibaba
Mar. 14 (NBD) -- Chinese dockless bike rental titan Ofo announced a new 866-million-U.S.-dollar financing led by Alibaba Group, with participation from Haofeng Group, Tianhe Capital, Ant Financial and Junli Captial.
The round marked a new funding record in the bike-sharing industry, the company claimed in an official statement on Sina Weibo.
Ofo used a combination of debt and equity financing for this round, China Entrepreneur magazine reported citing people familiar with the matter.
According to Chinese media earlier this month, Ofo has secured a funding of 1.77 billion yuan (280.0 million U.S. dollars) from Alibaba through chattel mortgage financing.
After Alibaba took control of Hellobike, the further funding into Ofo indicates the group's deepening involvement in bike-rentals.
The bike-sharing business provides not only massive data but a myriad application scenarios, which both Tencent and Alibaba couldn't miss.
Alibaba's new investment came as Ofo was reported to face financial pressures.
The most popular theory behind Ofo’s financing dilemma is that the car-hailing firm Didi is standing in the way, which hasn't been confirmed by Didi or Ofo.
Didi started to make investments in Ofo since September 2016. After particapating in Ofo's four rounds of financing, the company has become the biggest shareholder of Ofo with about 30 percent stakes and two board seats as of the first half of 2017.
As ofo reportedly refused to be included in Didi's strategic system, it would be interesting to know what changes this financing would bring to Ofo.
After this funding round, both Tencent and Alibaba become the important shareholders of Ofo, while Tencent is the biggest institutional shareholder of Didi. The bike-sharing startup is likely to become a significant check-and-balance platform for these two technology giants.
In order to land funding from Alibaba, Ofo has to implement deposit exemption and make changes to its operational plans, China Entrepreneur reported citing an anonymous source at Ant Financial.
Although the new funding will ease the cash flow pressure on Ofo, yet the company is still facing problems concerning how to turn a profit and how to improve customer experience.
Ofo's founder and CEO Dai Wei once acknowledged that the customer experience is the most urgent task facing the company.