Bike Share Industry - Part 1- Consolidation play
My walks have become interesting of late. I have to constantly dodge bikes, avoid being run over by speeding cyclists or jump to escape being banged into by some bikers while I occasionally jump and hop over the bikes which are lying all around. But all this jumping and hopping clearly establishes that the bike sharing industry has made significant inroads into our daily lives.
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The statistics are quite impressive. Mobike has more than 8 million bikes spread out over 200+ cities and China alone has more than 20 million bikes spread across by more than 50 bike sharing companies. I expect them to move into a non metro large Indian city pretty soon. Interestingly, there were more than 1100 bike sharing systems in operation across the world as of June 2017. I am sure we recollect the Citibank sponsored blue bikes in New York City and similar arrangements in London, Barcelona Madrid etc. sponsored by different institutions. And these numbers could have only grown given that the VC investment in the space leapfrogged to $2.8bn in 2017 from around $300m the previous year. China is leading the world here but USA has begun to catch up with Spin, Jump, Limebike and Birdrides while Europe has Call a bike and Next bike attracting money too. The good folks living in San Francisco are struggling to come to grips with e bikes zipping across and strewn around. But the sector has not been without turmoil as Bluegogo (3rd biggest in China then) went bankrupt after putting in close to 13 million bikes on the road. They had launched in 2016 with more than $90 million in venture funding. Before them, Wukong bikes went out of business after 90% of his bikes went missing in the first five months of operations. They had failed to install GPS systems on their bikes and by the time they realized the criticality of GPS, money had run out. Mingbike is another casualty in the bike sharing space.
Dock-less bikes is the major innovation which spurred the bike share industry. It was the sheer convenience of it all, when you can look up the location of the nearest bike on the app, pick it up in a jiffy using the QR code and drop it wherever you want when you are done.
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But what is it that is causing so much buzz and excitement in this space? Is it the innovative tech with the clever bundling of GPS and dockless locks in a mass produced standardized vehicle or is the possibility of data driven analytics on millions of user data points or is it the business model itself or is it the fear of missing out on the next big thing which is attracting oodles of cash to this industry which is segmenting itself fast with E scooters, electric bikes and specialized bikes attracting their own users with an eye towards an eventual consolidation in the space.