Recently, a Chinese court ruled that Ofo, a startup providing bike sharing service worth $ 2 billion, was unable to pay debts to partners and people. use. This incident is the latest warning for investors in Chinese startup sector.
According to the decision of the Tianjin court on June 17, Ofo basically no longer had any assets, so he could not pay the debt to Thien Tan Fuji Bicycle Company-Ta. Previously, Thien Tan Fuji-Ta filed a lawsuit against Ofo in order to recover the debt of 36 million USD. Specifically according to the court, the current accounts of Ofo all have a balance of zero or have been frozen. This startup also does not have real estate, cars or other investments.
Ofo, founded five years ago, had expected that more and more Chinese people would use bicycles to travel short distances to get in / out from parking lots or public transit points. In 8 rounds of capital raising from 2015 to 2018, Ofo has raised up to 2.2 billion USD from big names like Alibaba, Didi Chuxing and other investors. During the same period when the share of development bicycles, Mobile, Ofo's main rival, also mobilized 900 million USD. It even inspires a range of other shared businesses.
Bike-sharing firms have set up a number of car supply points across Chinese cities, where users can rent cars for a fee of only 99 CNY, even cheaper to rent hourly. But the problem is that these rental bicycles face vandalism or theft and are left piled up on the sidewalk, the roadway makes the city authorities have a headache. At time, Ofo lost or was stolen to 90% of his bike.
And more importantly, how to make a profit when you only charge a few dongs for each lease while spending money to buy hundreds of thousands of bicycles. In 2017, some bike sharing startups showed signs of faltering.
In December last year, hundreds of Ofo users surrounded the company's headquarters in Beijing to request a return of the deposit. A total of 12 million users who are signing up with the company want to receive their deposit back, totaling nearly $ 170 million. The CEO of Ofo was also blacklisted by a court of people with default.
The miraculous and stumbling growth of Ofo is a good example for many investors who focus on China, who place big bets on money-burning startups with the expectation that they will quickly IPO to withdraw their investment. attached profit. With China's economy slowing down and the poor performance of Chinese tech companies new to IPO last year, investors no longer want to risk, and this makes the future of small startups become blind.
Last year, Ant Financial (Alibaba's financial subsidiary) proposed to buy Ofo for $ 2 billion but eventually gave up. However, rival Mobike was rescued by a $ 2.7 billion acquisition of Meituan Dianping service provider. Currently, Mobike has changed its name to Meituan Bike.
Meanwhile, Ofo has narrowed or completely withdraw its activities to expand into foreign markets, including projects in the US, Japan and Singapore. In the country, although Ofo has not officially announced to stop doing business, users said they rarely see yellow bikes on the street.
Ofo has no statement about the incident but previously shared publicly that they are still operating normally. On April 1, the company's Twitter page posted a status line with the content: "People are being paid back". Obviously, with his status, this is a highly authentic statement because Ofo has no mind to make fun of.