Hellobike, a bicycle-sharing startup backed by Ant Financial, plans to raise at least $500 million in funding as it fights for customers in a brutal Chinese market, people familiar with the matter said.
The startup could seek as much as $1 billion as it gauges interest from both existing investors and new backers, the people said, requesting not to be named because the matter is private. While the Shanghai-based company’s valuation wasn’t clear, in June it said it was worth $2.3 billion.
Just a few years after Chinese startups built dockless bike-sharing into a global business, the sector is floundering as pioneer Ofo flirts with bankruptcy and Mobike shows no signs of ending losses. Hellobike, a relative late-comer, emerged as a strong contender with the backing of Ant Financial, which is leveraging the platform to win mobile payments business.
Though the funding may look surprising given the financial tumult, Hellobike is part of a proxy war in China. Ant Financial is the finance affiliate of Alibaba Group Holding Ltd., which is locked in brutal fight for e-commerce customers with Meituan Dianping, the owner of Mobike.
Hellobike and Ant Financial, formally known as Zhejiang Ant Small & Micro Financial Services Group Co., declined to comment in separate emailed statements.
While Hellobike has managed to remain a standalone entity and now has 200 million registered users, it’s done so by repeatedly raising new capital.
Hellobike tapped investors at least twice last year, completing a 4 billion yuan ($596 million) round as recently as December, according to Chinese news publication Jiemian. Co-founder Li Kaizhu said in a January interview that the company would seek a future initial public offering without specifying a time-frame.
Meituan’s $3.4 billion purchase of Mobike is proving problematic with Hellobike’s heavy investment in the sector. Since the deal, Meituan has announced plans to pull out of most overseas markets and reduce the number of bikes it has on the streets as it tries to turn a profit.