After Wukong Bikes’ bankruptcy just 8 days ago – June 8th 2017 – yet another bike-sharing company has gone bust.
On June 21st, 3Vbike announced that it is going out of business, primarily due to a large amount of stolen bikes causing a strain on liquidity. This may come as a surprise to the company’s many users, but according to research by a blog “Make In China” (寻找中国创客）, the company had been on the edge of bankruptcy since as early as mid-May, which was just 3 months after its launch. As a result of the closure, it has recently been pushing users, who pay a fixed upfront deposit for bikes, to apply for refunds as soon as possible
Almost no response to more than 100 pitch attempts
In a recent interview, The founder of 3Vbike Wu Shenghua said he first tried to enter the bike-sharing space in September 2016, but found it very difficult to raise money.
“I was very optimistic about this model, thinking it would be easy to raise a few million RMB, but found the reality to be the opposite.” he stated.
“I approached a huge number of institutions, including Sequoia Capital, but from the 100 plus decks I sent out, I got pretty much no reply, and the one or two who did reply didn’t want to invest”
Wu therefore started off using 600-700,000 RMB of his own money, and in February 2017 started distributing 1,000 bicycles among a few of Beijing’s surrounding third-tier cities, including Baoding （保定）and Langfang （廊坊）, as competition in larger cities was already too fierce.
“I’m not optimistic about bike-sharing”
According to Wu Shenghua, 3Vbike had 11,000 members before bankruptcy, with as many as 500 orders a day.
However, due to the speed at which the venture was rolled out, the bikes were not equipped with smart locks, which may explain why only a few dozen of the 1,000 bikes have been found. Most of them were stolen or abandoned in remote locations.
“By the middle of May, we basically give up 3Vbike and starting closure proceedings”, Wu told reporters.
In fact, there was never even an App – everything was done through WeChat, from registration to payment. This also meant that the accuracy of bike locations suffered from WeChat’s relative lack of precision compared to standalone apps, where location is a crucial element.
Wukong Bikes and 3Vbike had several things in common: 1 – the founders are serial entrepreneurs, 2 – both were new to the bike-sharing space, 3 – at entry points of December 2016 and February 2017, both were latecomers, 4 – neither were able to raise money, and 5 – both distributed bikes of low quality.
The story is very different over at Mobike who just raised another $600 million. It is reported that ofo is also preparing a new round of financing. Clearly then, it is hard to survive as a minor play in the major leagues.
This article was edited and translated by Pandaily