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Did Ofo Prove To Be a Struggling Player In a Thriving Game?

Jul 24, 2018 by Meeta Ramnani
Did Ofo Prove To Be a Struggling Player In a Thriving Game?

The decision of cash-strapped Ofo, the Alibaba-backed bike-sharing unicorn, to quit India has left the field empty for several other players to thrive from a booming industry.

At least three dockless indigenous operators --Zoomcar's Pedl, Yulu and Mobycy---as well as Mobike, a Chinese cycle-sharing unicorn are optimistic about the future.

Interestingly, Mobike started operations in India in May, exactly a month before Ofo decided to quit. However it is looking to expand its business in the country, let alone the idea to shut shutters.

Market watchers insist that the industry in India holds immense potential.

Pravin Patil, Managing Director and CEO at Starkenn Sports, India’s Premium cycle brand said, “Ofo’s exit only means more scope for local players and good news for them. While we do not have a great infrastructure for cycling, that has never stopped any growth. In fact, the sale of premium bikes in the country has gone up, after bike-sharing came to India. People are trying their hands-on cycles at a very low cost and then want to upgrade.”

The fact that cycles are not as easily affordable for the common man in India as it may appear, is expected to contribute to the growth of the industry.

A joint report by the New Delhi-based The Energy and Resources Institute (TERI) and All India Cycle Manufacturers Association (AICMA) says that the price of the cheapest available bicycle in India is about 15% of annual per capita income against 2.5% of China's.

The birth of the industry

It was in 2015, when a new bike-sharing model began to appear in Asia, particularly in China.

It was a marriage of technologies like mobile payments options, IoT, advanced GPS technology with remote locking and tracking systems.

This allowed companies to launch bike-sharing services for last mile connectivity in urban areas.

Amit Dekhle, a student at Savirtibai Phule Pune University, said, “The university is as big as four acres and using Rs 1 or Rs 3 for half an hour inside the campus becomes really helpful. What I use it the most for is from the hostel to the department which saves 20 minutes of my time. But many a times I do not find a bike near the hostel and choose to walk.”

In India, Zoomcar launched its trademark green rides, called PEDL, in 2013. The company has been operational in nine cities in India including Bangalore, Pune, Mumbai, Hyderabad, Chennai, Varanasi, Kolkata, Lucknow and Udaipur.

It has seen a total funding of USD 100 million of which USD 40 million was raised in February in Series C round. Other local bike-sharing operators in India include Bangalore-based Yulu bikes that operates in Bangalore and Pune, Gurgaon-based Mobycy, currently operational in Delhi, Noida, Kota, Chandigarh, Faridabad, Jaipur and Bangalore and is planning to expand to Pune, Mumbai, Hyderabad and Ahmedabad.

It has raised a total of USD 500 thousand in its Seed round in November 2017.

These players are unfazed by Ofo's exit.

“Ofo’s exit does not reflect anything on the market potential in India. The bike-sharing market is now seeing regulators coming in China as the number of bikes there was uncontrollable with over 2 crore. We don’t even have a total of 25 thousand bikes here in India, while the demand is huge. The market here is underserved across Tier I and Tier II cities,” insists Greg Moran, CEO & Co-founder of Indian bike-sharing platform, Zoomcar.

The Ofo void

While Ofo remained the most funded bike sharing company with a total raised amount of UDS 2,147.84 million, it had backing from big investors like Ant Financial, GSR Ventures, Shunwei Capital, Didi Chuxing, Xiaomi and Alibaba Group.

In US, Didi Chuxing (rivals of Uber) helped Ofo against the Uber bike sharing.

In December 2017 when Ofo refused a merger proposal from its many investors, including Didi, its strategic partnership with Didi collapsed as the investor acquired Bluegogo, a smaller bike-sharing brand.

The latest funding that Ofo got in March, of USD 866 million from Alibaba, Ant Financial and Haofeng Group among others, was a fund raised for equity as well as debt capital.

A tales of two giants

Unlike Ofo, the Meituan-owned Mobike is looking to expand operations as it is confident of growth opportunities. Vibhor Jain, CEO of Mobike India said, “We are scaling in India, but slowly. We see a significant potential from Mobike perspective. India is at a very nascent stage where the bike-sharing companies are not more than 2-3 years old.”

“India surely needs infrastructural improvement, so we have signed an MoU with Pune Municipal Corporation where we are working on building cycling infrastructure of 700 kms."

The company that made its debut in 2016 with a small fleet of 2,000 cycles, operates in select areas of Pune.

It has raised a total funding of USD 928 million before it was acquired by Chinese trading platform Meituan-Dianping for USD 2.7 billion in April this year.

The bike-sharing industry across the world is going through a boom, with five unicorns vying for the pie. Three of them, Ofo, Hellobike and Mobike, are from China.

As for the scene in India, all the players in the fray are confident that they are all here to stay.

Meeta Ramnani

Meeta Ramnani is a Bangalore-based tech reporter. She focuses on emerging startups in the fintech, edutech and healthcare space. She can be reached at

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