Beijing bike-sharing giant ofo launched its pilot program in Adelaide on Tuesday as the startup ramps up its goal to expand in to 20 countries by the end of the year.
Founded by a group of Peking University students in 2014, ofo’s dock-less bike sharing platform has since grown to a platform used by 200 million global users in 180 cities across 13 countries, and the company says it processes 25 million global transactions utilising its 10 million bikes each year.
The startup says it has been funding this growth through the $US1.29 billion ($1.65 billion) it has raised across eight funding rounds, most recently closing a $US700 million Series E funding round led by Alibaba, CITIC private equity and Chinese private equity firm Hony capital.
These funds have been primarily used to accelerate an aggressive expansion regime that has the Chinese company hoping to operate in 20 markets by the end of this year.
Ofo’s launch into Adelaide marks the startup’s first foray into the Australian market, and its head of strategy in Australia Scott Walker says the startup chose to launch locally because it saw “a massive opportunity in the market” after having “already proven our model and business overseas.”
Australia is no stranger to bike-sharing startups entering the market, but it has a chequered history with the on-demand form of transport. Startups like oBike have deployed 1250 dock-less bikes in Melbourne and 1000 in Sydney since June this year, but has been subject to criticism about these bikes clogging footpaths, becoming safety hazards if incorrectly parked, and edging out space on existing bike parking racks.
In Beijing and Shanghai these problems exist on an even larger scale, with bikes left strewn across footpaths, abandoned in garbage dumps and thrown into rivers, prompting government agencies to try and reinforce bike parking laws by claiming tens of thousands of these shared bicycles.
Walker acknowledges that bike-sharing is “quite a resource-intensive model” and says there is still “quite a bit to be done to get it right”. But he maintains ofo’s Adelaide pilot will be a success because of its slow and considered rollout.
After establishing an Australian office in Sydney earlier this year, ofo deployed teams on the ground to scout out potential cities where its bike sharing offerings could work. After months of “testing and observing the market” Walker says they identified Adelaide as the best option for a pilot after noting the lack of competition and the city’s commitment to “smart cities and innovation.”
Launched on Tuesday, the pilot program will see 50 bikes deployed in Adelaide’s CBD and northern suburbs, and Walker says the ofo team will be “keeping an eye on the market” as they test how their offerings fare in a real-world environment.
Bike-riders will be able to use ofo’s bikes for $1 for 30 minutes, with an individual ride cap of $5 to be applied. The ofo app with list ‘preferred parking zones’ for users to leave the bikes, which are fitted with GPS-enabled geofence technology to guide users to the right parking areas.
The company said in a statement it is also working on a credit system to reward those who use its bikes correctly and deduct points from those who don’t.
Walker says ofo will aim to avoid the fate of its competitors through launching with a small-scale pilot, collaborating with the City of Adelaide — which it has already secured a permit from — and closely observing the market to gain perspective on scale and consumer feedback.
“Having a pilot program gives us time to learn and grow, and we will be working with the government to share those learnings … and find out what drivers and motivates them, and what their concerns may be,” he says.
After the Adelaide pilot, ofo will look at scaling nationally. The company is rapidly growing its Australian operations team, Walker says.
For other startups looking to scale their business globally, Walker has some clear advice: don’t rush in.
“It’s important that startups don’t rush in to market, but instead really think about solving the problem: not just saying they’ll solve it but actually solving it,” he says.
“Look at the market and the regulatory environment and how to go about launching in a really smart way. We took our time to get it right.”