Alibaba-backed Chinese dockless bike rental company Ofo has shut down its operations in India following reports of a cash crunch. It fired most of its 30 employees in India.
Rajarshi Sahai, director of public policy and communications, Ofo, said, “We are shutting down our country operation. It is part of a global strategy to shrink the footprint.”
“We want to leave the country on a positive note. We have completed 1 Mn rides across seven cities in 10 weeks of operations. I hope that the other players in the ecosystem will take the opportunity to grow,” he added.
Ofo had launched its operations in various campuses and gated communities.
It had announced signing MoUs with the Pune Municipal Corporation (PMC) and Coimbatore City Municipal Corporation (CCMC), followed by a series of pilot launches of services in seven cities — Chennai, Coimbatore, Indore, Ahmedabad, Bengaluru, Delhi and Pune.
The company shut down its operations in Coimbatore in June.
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Following this, it now plans to shut down its operations in the rest of the cities in another 60 days.
“The move does not mean the country has no potential in the segment. Even though it is a difficult market, the business model has huge potential,” said Sahai.
Reports have also surfaced that the company has mass fired its employees following cash crunch in the company.
Other reports have claimed that Ofo will be shutting operations in a few countries, including Australia.
The shut down due to cash crunch in Ofo is a surprising revelation as the company last raised $866 Mn in new financing led by Alibaba Group in March 2018. In April, Sahai had claimed that the company had “already broken even in select cities, so in terms of business model viability, there is definitely scope in India.” At the same time, he revealed that Ofo planned to use part of the $866 Mn towards India.
Valued at $2 Bn, Ofo had a user base spread across 170 cities in China, Singapore, the US, Austria, Thailand, the UK, Russia, Italy, Australia and Kazakhstan and serves as a “non-docking” platform that allows users to track as well as lock and unlock their bicycles remotely.
Since its inception in 2014, the bike rental startup has secured more than $2 Bn funding in nine rounds from up to 21 investors including Ant Financial, Didi Chuxing, DST Global, Shunwei Capital, Coatue Management, Citic PE, Hony Capital, Matrix Partners China, ZhenFund, GSR Ventures, Will Hunting Capital and Hongdao Capital.
Soon after the entry of Ofo in India, its global rival Mobike announced to began its operations in India in May 2018. Mobike, which operates in over 200 cities across 16 countries, had plans to begin its operations in cities like Nagpur, Delhi, Bengaluru, Pune and Ahmedabad, among others.
Indian cab aggregator Ola has already come up with Ola Pedal, its bicycle-sharing service. There are already dozens operating in China, Southeast Asia and the US among other countries.
[The development was reported by Business Standard.]