A common sight in China nowadays is the colourful bikes with QR codes parked on the streets. Young Chinese white-collar workers take out their phones, open WeChat and scan the code, just as they have been doing everyday for the past few months. The ‘smart lock’ releases the bikes within seconds; users quickly get on them and start their day.

Many of the share-bikes bear the logo of Bluegogo, the third-largest bike sharing platform in China. The seven-month-old startup, founded in 2016, has been growing quickly thanks to China’s booming share economy. The company is also drawing robust interest from private equity  and venture capital (PE/VC) firms by aggressively expanding its footprint in first-tier cities.

 

But rapid growth also poses challenges to the company to churn their operating cash flow. The situation faced by Yufei Hu, vice president of Bluegogo, is just the same as when he was the former operation manager of Uber China, which ride-sharing company Didi acquired in 2016.

 

“The merger of Didi and Uber is simple. Data from Uber are imported to Didi’s platform, and the Uber drivers and users are also able to use Didi,” Hu tells The Asset in an interview. “But Bluegogo is different because we have tangible assets (bikes). We need to collect and deploy those assets.”

 

Like other competitors, Bluegogo tapped PE/VC markets for their operation. The company recently closed its 400 million-yuan series A fund raising from Black Hole Capital and ELEX with a total valuation of 1 billion yuan. With such fundraising subjected to lengthier cash-burning activities in the bike-sharing industry, Hu and his team need to find creative ways to expand, inside and outside of China.

 

Major players in this field have been aggressively seeking overseas opportunities. Peer bike-sharing firms Mobike and Ofo entered Singapore in March. Bluegogo chose to expand its footprint in San Francisco in January.

 

“Silicon Valley is in San Francisco and it is a perfect place to test the real capability of a startup. We expect more technology companies to see us,” says Hu. “In addition, we can place our bikes and test whether our business model works.”

 

Bluegogo is one of only two companies that make their own smart locks and is the first to provide a bike with gears in the bike-share market. Hu believes that users are able to tell the difference in product quality across all brands.   

 

“I think the bike-sharing industry is almost at its mid-age in China,” says Hu. “At this age, major players have already placed enough bikes. Each company starts to find the best operating models, learn the regulations and participate in the price war.”

 

Amid fierce competition, Hu believes his operation team has the energy, as most successful technology companies do, to survive what is likely to be a protracted battle. “Our team is full of people with vitality,” says Hu. “We are very energetic and young. The most experienced member was born in 1982 and the youngest was born in 1995.”