Do Alibaba and Tencent still have a chance against the latecomers in the shared bike industry?

More than half a month later, ofo officially announced on the 6th that it had completed a US$700 million Series E financing round. This round of financing was jointly led by Alibaba, Hony Capital and CITIC Industry Fund, and Didi Chuxing and DST continued to follow up. China Renaissance Capital served as the exclusive financial advisor for this round of financing.

With the new round of financing finalized, the arms race in the shared bicycle industry has further escalated. The huge amount of capital has further reduced the possibility of a short-term merger between ofo and Mobike, and the clearance of the second tier of shared bicycles has accelerated.

Alibaba vs. Tencent

"Who ranks first in the shared bicycle industry? Tens of millions of users are voting with their feet every moment. What is more important is how it has changed our body shape and the appearance of the city. Looking around, ofo has only one competitor, which is laziness." After the financing news was released, Zhu Xiaohu, the A-round investor of ofo and managing director of GSR Ventures, forwarded the news and made the above comments.

This can't help but remind people of the quarrel between Zhu Xiaohu and Mobike investor Ma Huateng half a month ago. Behind ofo and Mobike is the confrontation between two major investment camps, and with Alibaba leading the investment this time, the shared bicycle industry has also been interpreted by the outside world as a battle between Alibaba and Tencent.

In fact, as early as April this year, ofo received strategic investment from Ant Financial, an Alibaba-affiliated capital. At that time, the two parties announced that they would carry out comprehensive and in-depth strategic cooperation in the fields of payment, credit, internationalization, etc. This was once considered an important sign of Alibaba's official entry into ofo.

From the outside, Ant Financial needs to use ofo to further improve the Sesame Credit system and also to bring more traffic to Alipay.

Subsequently, ofo and Ant Financial started cooperation on deposit-free payment. On March 16, ofo announced a strategic cooperation with Sesame Credit. Users with a Sesame Credit score of 650 or above in Shanghai can use the yellow bike service without deposit through credit authorization. On April 18, ofo announced again that credit-free deposit is available in Hangzhou. So far, its credit-free deposit service has been stationed in five cities: Shanghai, Hangzhou, Guangzhou, Shenzhen, and Xiamen.

Tencent invested in Mobike in the C+ round and further led the latest round of E round financing of US$600 million. It also began to provide assistance to Mobike in terms of WeChat traffic, mini-programs, back-end technology, cloud services, and advertising resources. For example, Mobike bicycles began to appear in the third-party service "Nine-square grid" on the "WeChat Wallet" page, on the same level as popular services such as "Didi Chuxing", "Meituan Takeout", and "JD Best Selection" that WeChat had previously connected to.

For the two giants, the daily order volume of ofo and Mobike has reached tens of millions, which is an important scenario for offline payment. At the same time, the value brought by shared bicycles in travel data, offline traffic, map data, and integration with local life services is also the reason why the giants entered the market.

The arms race is escalating

"The financing speed of shared bikes is so fast that even '叕' is not enough," one netizen joked. In less than two years, both shared bike companies completed their E round of financing, with a high amount of financing and a fast financing speed that are extremely rare in the venture capital circle.

At the same time, over the past period of time, the two shared bicycle companies have been competing for territory, speed, and verbal battles.

Because of the network effect of shared bikes, the scale competition is particularly fierce. Since 2015, Ofo has entered more than 150 cities. It is reported that by 2017, it will put 20 million bikes into service, serving 200 cities around the world and entering 20 countries and regions. Mobike has also entered 130 cities around the world in 14 months, and plans to reach 200 cities around the world in 2017.

At the same time, both parties are also expanding their respective "circles of friends", cooperating with companies such as Ericsson, Huawei, Qualcomm, MediaTek, China Mobile, China Telecom, Beidou Navigation, etc., increasing investment in the Internet of Things and hardware, preparing for operational capabilities and effectiveness. At the same time, they are consolidating their cooperative relationship with the government to solve problems such as road planning and vehicle management.

For shared bikes that have yet to find an effective profit model, all of this means huge capital investment. Whether in terms of financing scale or investor weight, the competition in shared bikes is increasingly moving towards the leading companies, and with the successive closures of Wukong Bike and 3Vbike, the window for shared bikes to enter the market is also closing.

Do latecomers still have a chance?

"There is basically no chance for latecomers." Huang Peihua, partner of Qiming Venture Partners, an investor of Mobike, and Zhu Xiaohu, managing director of GSR Ventures, an investor of ofo, both expressed the same view to the First Financial reporter. However, the second-tier shared bicycle brands represented by Xiaoming Bicycle and Hellobike are still trying to open a crack in the market.

"It's a good thing that both companies have raised money. If the two big companies are fighting, there will be no way to form a monopoly in the market. Urban management will continue to be chaotic, and therein lies the room for development," said the person in charge of a shared bicycle company.

"If shared bikes don't adopt a circular economy, it will lead to a garbage crisis." Zhu Dajian, director of the Tongji University Sustainable Development and New Urbanization Think Tank and professor, once put forward this view at a seminar. With the rapid deployment of shared bikes, it is common to see shared bikes filling the streets and blocking traffic jams.

"The systematic design of bicycles and standardized parking is the key. The stacking model is barbaric and wasteful. It is an unrestrained monster spawned by capital. There should be a rope from the beginning." Jin Peng, founder of Wuqiong Venture Capital, told Caixin.

The Xiaoming Bicycle, which it invested in, intends to achieve a "mistress's counterattack" through the "electronic fence" technology. The so-called electronic fence is to use the Internet of Things chip to transmit signal coverage technology to set a fence for shared bicycles, so that bicycles can only be parked within the specified range. If the bicycle is not within the specified range, the bicycle will not be locked, or it will continue to be charged after being locked, and the system will send a text message to remind the user.

"Differentiation is the key to survival. Unlike Didi, shared bikes are an asset-heavy project and there will not be a monopoly." Chen Yuying, founder and CEO of Xiaoming Bike, told Caixin that in her opinion, shared bikes will inevitably go downhill, and the urban-rural junction and third-, fourth- and fifth-tier cities are markets that the leading shared bike companies are unwilling to enter in the short term, "because the probability of being stolen and damaged is extremely high, and electronic fence technology is an important technical guarantee for entering these areas."

Like Xiaoming Bike, Hellobike, which just announced on July 4 that it had received B+ round of financing from Weimar, also bypassed the first-tier red ocean market from the beginning and went straight to second- and third-tier cities. It has now entered more than 90 second- and third-tier cities and signed exclusive operating rights with some regions. Hellobike co-founder and COO Han Mei called this strategy "surrounding the city from the countryside" and plans to enter at least 300 cities in 2017 and put 5 million bicycles into use.

It can be predicted that for a period of time, a large number of shared bicycles will continue to be launched into the market, but the market size of shared bicycles is limited. In addition to scale and operational efficiency, urban management will also become the second competitive threshold for shared bicycles.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.