Chinese bike-sharing service Ofo in financial crisis
Chinese bike-sharing startup Ofo is reportedly on the brink of bankruptcy.
Cash flow problems are causing ‘immense’ financial pressure despite raising $2.2billion in funding.
The bike-sharing firm is heavily backed by Alibaba.
According to the Financial Times, Ofo founder Dai Wei outlined the extent of its financial problems in a letter to employees.
"For the whole of this year we’ve borne immense cash flow pressure, returning deposits to users, paying debts to suppliers."
"I’ve thought countless times … of even dissolving the company and applying for bankruptcy."
Bankruptcy could yet be unavoidable.
The FT reports up to 10m Chinese users have applied for refunds on their deposits which could cost the company an estimated $150 million.
Dai said ‘not being able to correctly assess the changing external environment from the end of last year’ has caused the financial difficulties.
It is thought Ofo was at one time burning about $25 million a month in building up its cycle inventory and rapidly expanding to new markets.
Rival Mobike was spending even more than that and is reportedly in similar financial difficulties.
Between them, Ofo and Mobike have rolled out about 20 million bikes across cities in China and overseas.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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