Beijing-based Black Hole Capital has led a RMB400 million ($58 million) investment in bike-sharing service Bluegogo, a Tianjin-based bike sharing company. Additional investors in the round are Shenzhen-based healthcare equipment developer Smart Xintong.
Black Hole Capital is a venture firm founded by Zhang Liang, the son of Chinese property giant R&F Properties’ co-founder Zhang Li. The latest round places a post-money valuation of Bluegogo at RMB1 billion ($140 million). Founded in 2014, Black Hole focuses on the Internet and mobile Internet, hi-tech, smart hardware, consumer goods and services, as well as healthcare sectors.
It has previously invested in bike sharing services, having led an RMB100 million ($21 million) series A+ round in bike sharing firm Ubike in November 2016.
SpeedX, the global smart cycling brand which designs and manufactures Bluegogo’s bike, has secured investments to the tune of an RMB150 million ($21 million) Series B round in November 2016, which followed an RMB50 million ($7 million) Series A round from Zhen Fund and Sinovation Ventures in 2015.
Incepted in November 2016, Bluegogo’s business operations current sees it present in five cities that include Shenzhen, Guangdong, Chengdu, Nanjing and Foshan. To date it has deployed 150,000 bikes and reports a total registered user base of 2.53 million.
The company states that it plans to expand its business footprint to Beijing as well as expanding into overseas cities. It launched in San Francisco in January, with the overseas pushing coming at a time when the Chinese bike sharing industry has gotten more saturated, with reportedly up to nearly $500 million invested in numerous startup b
The bike sharing industry in China has gotten very crowded, with nearly half a billion U.S. dollars invested into numerous start-ups. But the industry is showing signs of saturation, with Kala, a bike sharing company, shutting down last week after just 30 days of operation.
Singapore’s state investment firm Temasek Holdings recently led a strategic investment in the Mobike while Ofo closed a $160 million Series C in Q4 2016. With increasing urbanisation globally, the urban mobility enabled through bike-sharing is raising considerable interest worldwide.
In China, there is a lot of opportunity for entrepreneurs with creative solutions and business models to implement and launch their ideas to market quickly. Given the size of the population, this is particularly attractive to companies that can link their offerings to consumer spending,” stated Lyndon Fung, US Capital Markets Group, KPMG China, in KPMG’s Venture Pulse Report Q4 2016.
Bike sharing services are capital-intensive, with accelerator Startupbootcamp noting the “high costs associated with implementing city-wide solutions and the large infrastructural changes that might be needed.”
As at November 2016, the largest bike sharing scheme is in Hangzhou, China, which consists of nearly 80,000 bikes and spread across 2700 stations. Such schemes are likely to encounter management issues related to the bike (e.g. poor maintenance; failure to regularly inspect bikes and stations).
Most schemes also lack data on bike locations and incident, exposing operates and users to an array of safety and liability risks, though in Bluegogo’s case, the use of GPS-enables bikes considerably reduces this.