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HelloBike bikes are parked on a sidewalk in Shanghai, China on Wednesday, January 9, 2019. The bicycle sharing industry in China has developed too rapidly and the company aims to make public the moment timely, co-founder and leader. President Li Kaizhu said in an interview. Photographer: Qilai Shen / Bloomberg
© 2019 Bloomberg Finance LP
Hellobike raises $ 500 million in a suicidal marketplace where its main competitors are either flirting with bankruptcy or being completely engulfed by much larger ecosystems (Mobike).
Hellobike is one of the smallest players in the bicycle sharing market in the Chinese market, but he obviously thinks he has a chance to remove the other two. & Nbsp; Hellobike is currently supported by Ant Financial, the Alibaba subsidiary, who have been strong supporters of Ofo in previous rounds.
The valuation is unknown, but given the implosion of the sector in the second half of 2018 and the huge risks badumed by any investor crazy enough to invest money, it must be well below 2.3 billion dollars that the company claimed last July. The strategy here must be to use the money to put the other two players out of the way and take the market for itself.
In this kind of business, it's a winner who takes the whole match and it's only if there is a player left standing that prices can go up and the money will be generated. Until then, there will remain a bloodbath of brutal competition where huge losses are incurred and money spent.
In a normal situation, the most powerful company that uses its resources in an optimal way resists the others, which results in a high quality service, well managed and profitable. However, bike sharing has long been an indirect war between the large Alibaba and Tencent ecosystems and, in this respect, has become an unpleasant chicken game. Tencent is heavily invested in delivery logistics through its position in Meituan and logistics is an essential part of Alibaba's core business. This is where they are interested in this sector.
Therefore, this bloodbath in sharing bikes in China should continue until one of the two flashes. In addition, even if Hellobike becomes the winner of bike sharing, it is unlikely that he will earn enough money to generate a good return on his investments.
Indeed, years of bleeding have defined the expectations of users in terms of the cost of sharing bicycles. To make money, prices need to increase a lot, which means that demand could very well fall as soon as the required price increases come into effect, China being a price-sensitive market. & Nbsp; & nbsp; The net result is that neither Ofo nor Hellobike are doing very well, which means that they will be forced to merge (they have the same backers) in order to reach the scale and create an effect. operational leverage. There is no reason to even consider this investment and you should not invest money in what you absolutely can not afford to lose in its entirety.
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HelloBike bikes are parked on a sidewalk in Shanghai, China on Wednesday, January 9, 2019. The bicycle sharing industry in China has developed too rapidly and the company aims to make public the moment timely, co-founder and leader. President Li Kaizhu said in an interview. Photographer: Qilai Shen / Bloomberg
© 2017 Bloomberg Finance LP
Hellobike raises $ 500 million in a suicidal marketplace where its main competitors are either flirting with bankruptcy or being completely engulfed by much larger ecosystems (Mobike).
Hellobike is one of the smallest players in the bicycle sharing market in the Chinese market, but obviously he thinks he can try to eliminate the other two. Hellobike is currently backed by Ant Financial, the Alibaba subsidiary, which have both strongly supported Ofo in previous editions.
The valuation is unknown, but given the implosion of the sector in the second half of 2018 and the huge risks badumed by any investor crazy enough to invest money, it must be well below 2.3 billion dollars that the company claimed last July. The strategy here must be to use the money to put the other two players out of the way and take the market for itself.
In this kind of business, it's a winner who takes the whole match and it's only if there is a player left standing that prices can go up and the money will be generated. Until then, there will remain a bloodbath of brutal competition where huge losses are incurred and money spent.
In a normal situation, the most powerful company that uses its resources in an optimal way resists the others, which results in a high quality service, well managed and profitable. However, bike sharing has long been an indirect war between the large Alibaba and Tencent ecosystems and, in this respect, has become an unpleasant chicken game. Tencent is heavily invested in delivery logistics through its position in Meituan and logistics is an essential part of Alibaba's core business. This is where they are interested in this sector.
Therefore, this bloodbath in sharing bikes in China should continue until one of the two flashes. In addition, even if Hellobike becomes the winner of bike sharing, it is unlikely that he will earn enough money to generate a good return on his investments.
Indeed, years of bleeding have defined the expectations of users in terms of the cost of sharing bicycles. To make money, prices need to increase significantly, which means that demand may well fall as soon as the required price increases come into effect, as China is a price-sensitive market. The net result is that neither Ofo nor Hellobike will do very well, which means they will be forced to merge (they have the same backers) in order to scale up and create operational leverage. There is no reason to even consider this investment and you should not invest money in what you absolutely can not afford to lose in its entirety.
