Bike-sharing unicorn Ofo raises fresh funds from Jack Ma’s Ant Financial

One of Ofo’s distinctive yellow bikes. Photo credit: Ofo’s Weibo.

Chinese bike-sharing unicorn Ofo announced an undisclosed round of investment from Ant Financial, Alibaba’s financial affiliate, on Saturday.

The funding is part of a strategic partnership between the two companies, which includes mobile payments, credit, and global expansion. Ant Financial has its own credit system called Sesame Credit, which incorporates users’ spending habits into calculating its credit scores. It also provides China’s leading mobile payment solution, Alipay.

Ofo declined to comment on whether it would expand to markets where Ant Financial has acquisitions and investments.

“Ant Financial hopes that through partnering with Ofo, we can open our mobile platform, credit system, payments, security capabilities, etc. as a model for the bike-sharing industry, and help the whole industry improve and develop in an orderly fashion,” stated Jingxian Dong, CEO of Ant Financial, in a press release.

Ofo is one of many bike-sharing startups in China, which let users search and rent nearby bikes via an app. Since ramping up last year, the industry has seen millions of dollars of investment as well as a torrent of bikes flooding Chinese cities, such as Beijing, Shanghai, and Shenzhen. In response, local city governments have started drafting regulations for bike-sharing as startups continue to launch new bikes, which can swamp pedestrian walkways and other public spaces.

See: My one-day experience using a bike-sharing app

This isn’t the first time that Ofo and Ant Financial have partnered together. In March, Ofo began offering deposit-free bike rentals to users in Shanghai who had Sesame Credit scores of 650 and above. In April, the bike-sharing startup extended that service to Hangzhou. Users that don’t meet Sesame Credit’s requirements have to put down a deposit of about US$14 in order to start renting Ofo’s bikes, which cost less than a US$1 an hour to use.

Partnering with Ant Financial could help the Beijing-based unicorn battle its domestic archrival Mobike, which has also landed several powerful investors, such as Tencent. Both Mobike and Ofo are accessible through WeChat, one of Tencent’s social messaging apps, which has about 889 million monthly active users.

However, by partnering with Ant Financial, Ofo may be able to boost its presence outside of WeChat, as well as piggyback off the fintech company’s overseas presence, which includes India, the Philippines, Southeast Asia, and potentially the US. Currently, both Mobike and Ofo have launched in Singapore.

For Ant Financial, partnering with Ofo would not only bring more traffic to Alipay, which is battling WeChat Pay to maintain its lead in market share, but also data, such as information on credit scores and user behavior.

In addition to Ant Financial, Ofo is backed by ride-hailing startup Didi Chuxing, ZhenFund, DST, Matrix Partners, and others. Its last round of funding was in March, when it raised a US$450 million series D.

(Update: Added response from Ofo).

Currency converted from Chinese yuan. Rate: US$1 = RMB 6.88