In the first half of 2017, the sharing economy sector became a hot spot for venture-capital investment in China. Chinese tech media ITJuzi collected data showing that by June of this year there were 78 fundraises in the space, attracting a total investment of RMB 55.83 billion (USD 8.28 billion). The pursuit of capital for the so-called “sharing economy” has attracted a wave of entrepreneurs.
Solely taking the number of fundraises into account, bike-sharing, power-bank-sharing and space-sharing emergedas the three main sectors. There were 22 fundraises totaling RMB 10.43 billion in investment in the bike-sharing sector. Secondly, power-bank-sharing accounted for 19 fundraises totaling RMB 1.23 billion in investment. Space-sharing came in third, attracting nine fundraises totaling RMB 1.29 billion in investment.
Let’s take a closer look at these three main area of investment: bike-sharing, power-bank-sharing and space-sharing.
1. Bike-Sharing: 22 fundraises, total investment of RMB 10.43 billion
Bike-sharing saw the most investment in the first half of 2017, attracting a total investment of RMB 10.43 billion. Among those 22 investments, there were three companies that closed three rounds of financing. Mobike, ofo and Xiaolan Bike were the three startups with the largest single investment amount in the bike-sharing market.
Alibaba-backed Ant Financial invested USD hundreds of millions in ofo on April 22nd. Alibaba also officially announced that they led a USD 700 million Series E financing round for ofo on July 6th. This beat Mobike’s single financing record of USD 600 million raised last month by Tencent. The competition between Mobike and ofo became heated once Alibaba and Tencent picked their favorites.
Though the bike-sharing business was very hot among investors, there were also bike-sharing companies that failed. Wukong Bike and 3Vbike collapsed in the second quarter (Q2), having only survived for a few months. With tech-giants backing their favorites, the competition among bike-sharing companies became fiercer.
2. Power-Bank-Sharing: 19 fundraises, total investment of RMB 1.23 billion
Power-bank-sharing was the second-most-invested sector in the first half of 2017 having absorbed a total investment of RMB 1.23 billion. XiaoDian Technology, Jiedian Technology and HiDian Technology were the three startups with the largest single-invesment amount in the power-bank-sharing market.
Xiaodian Technology closed three rounds of financing in Q2. Investments in the sector mostly occured in April and May. However, with the market gradually becoming rational, June saw no investments at all.
Power banks are cheap to make but do we really need that many of them? Many believe that when the capital market becomes more rational, the bubble may burst.
3. Space Sharing: nine fundraises, total investment of RMB 1.3 billion
Space-sharing was the third most invested sector in the first half of 2017, with a total investment of RMB 1.3 billion. 5Lmeet, Urwork and MyDreamPlus were the three startups with the largest single invesment amount in the space-sharing market.
In the first half of this year two space sharing startups, 5Lmeet and MyDreamPlus, closed two rounds of financing. 5Lmeet raised RMB 500 million in strategic investment on April 7th and RMB 100 million for Series A+ round on Feburary 27. MyDreamPlus received USD 20 million for Series B round on May 24 and an undisclosed amount for Series A+ round on Feburary 14th from Tencent. Urwork had raised RMB 400 million for Series B round on January 18th and announced another RMB 200 million financing round in July.
There will be more space-sharing models appearing in the future. But, many startups are using the “sharing economy” concept to create rental businesses.
Although there is still a lot of controversy around this newly popular concept of “sharing economy” in China, it is undeniable that it brings convenience for people’s lives. However, the Chinese market is reactionary; once a concept attracts the attention of the capital market, all entrepreneurs rush to follow it. Perhaps entrepreneurs should become more rational and think long and hard about the nature of the sharing-economy business.