LimeBike, a bike-sharing company from Silicon Valley, is competing against China's dominant bike-sharing companies.

• LimeBike, a California-based company, has secured an additional $50 million in investment, bringing its total to $62 million, to accelerate its expansion plan and reach 30 cities and campuses across the US this year.
• Tencent and Alibaba-backed LimeBike aims to outdo Ofo and Mobike, who pioneered the dockless bike-sharing industry in China and expanded to the US.

In the US, a race is on to dominate the expanding smart bike market, with Chinese start-ups Ofo and Mobike, backed by unicorn financing, facing off against Silicon Valley-based LimeBike.

LimeBike is accelerating in the US with $50 million more investment and plans to launch in 10 more cities, aiming to surpass China's Ofo and Mobike, backed by Tencent and Alibaba.

Ofo and Mobike, the companies that pioneered the dockless bike-sharing market in China, are now battling for supremacy in the United States. Ofo began operations in Seattle, Boston suburbs, and Washington, D.C., in August, while Mobike launched in Washington, D.C., in September. LimeBike, the main U.S. competitor, started its first U.S. market at the University of North Carolina at Greensboro in June and has since expanded to 20 locations.

The number of bike-sharing trips in the U.S. has grown exponentially, with 28 million trips taken in 2016, which is equivalent to the annual ridership of the entire Amtrak system. The top five systems are located in New York, Greater Washington D.C., Miami, Chicago, and Greater Boston. Experts predict that the trend will continue as more people become interested in using bike-sharing services.

Chinese-style bike-sharing has arrived in America, with lime green bikes for LimeBike, yellow canary bikes for Ofo, and bright orange and silver bikes for Mobike. The market winner will be the first mover that can overcome challenges such as regulations, pricing wars, maintenance issues, bike theft, and vandalism.

The hot new transportation trend

LimeBike has secured $50 million in investment from various sources, including Coatue Management, Templeton Investments, GGV Capital, Jerry Yang's AME Cloud Ventures, ex-Google Ventures Bill Maris' Section 32, Stanford StartX Fund, and its Series A investors, to expand its operations to 30 cities and campuses nationwide this year.

Toby Sun, CEO and co-founder of LimeBike, stated that local players have a better understanding of the market. LimeBike is launching a new market every week and hiring a team of 10 to 20 people to support local operations. Additionally, the company is working closely with city officials to launch new markets. Toby Sun is a Berkeley MBA graduate and a US-China venture investor at Fosun-backed Kinzon Capital with ex-Tencent US general manager Brad Bao.

LimeBike, which grows at a rate of 50 percent per week, has reached 250,000 users and 10,000 bikes in 12 American cities, including Seattle, Washington, D.C., and Dallas, as well as eight university campuses. By the end of the year, LimeBike aims to have one million riders and add at least 50,000 more bikes and 10 new U.S. markets, including possibly New York City, Los Angeles, San Diego, and South Francisco.

LimeBikes quickly gained popularity in key markets, including Seattle, with 10,000 trips logged in the first week, according to Sun. If the U.S. roll-out is successful, LimeBike plans to expand globally in 2018.

"LimeBike is adapting the Chinese bike-sharing model for the U.S. market, according to Connie Chan, a partner at Andreessen Horowitz and a lead, early investor in LimeBike. The team has extensive experience working in the U.S. and understands what will be successful."

Chinese powerhouses

Ofo, the most global contender with the largest budget, has 10 million bikes and 20 million users across 15 countries and 180 cities. Founded in 2014 by CEO Dai Wei while studying at Peking University, Ofo is funded with $1.2 billion, primarily from Chinese sources, including Alibaba, Hony Capital, DST Global, CITIC Private Equity, and Didi Chuxing.

Grace Lin, vice president of Ofo North America, stated that the company aims to expand its presence in the US and make bicycles accessible to everyone. She leads a 50-person team and oversees Ofo's four U.S. markets. Ofo's goal is to have 1 million users in the US by the end of this year, with plans to add the Denver suburb of Aurora to its footprint this week.

Mobike, the largest smart bike-sharing company globally, operates in over 100 cities worldwide and has more than 5 million bikes. The company boasts 100 million users in China, Singapore, the U.K, and the United States. Mobike was founded in early 2015 by CTO Joe Xia and two Chinese co-founders, and is backed by a group of $1 billion investors, including Tencent, Sequoia Capital China, TPG, Hillhouse Capital, Temasek, and major institutional investors. Mobike has integrated Tencent's WeChat popular service for cyclists to scan for and pay for bikes.

If rumors of a possible merger between Ofo and Mobike become a reality, LimeBike could face a formidable competitor. Such talk is currently dismissed and downplayed by the companies. If a merger occurs between the two leading Chinese bike-sharing companies, it would mirror the joining of China's top car-hailing services backed by Alibaba and Tencent into one major player, Didi Chuixing, which acquired Uber's China business in 2016. Smart bikes, or the Uber for bikes, have become a popular, eco-friendly, and efficient way to travel short distances for commuting or running errands in China. The new biking craze in China has ironically brought biking back to Beijing, Shanghai, and other congested Chinese cities.

Cyclists can easily find, unlock, rent, pay for and park bikes anywhere with the dockless bike-sharing model, using a smartphone app, GPS technology and QR codes.

Bike-sharing has been introduced in New York City with docked bikes like Citi Bike, but a new, more flexible dockless model could quickly gain popularity in the U.S., just like Uber did for cars. Free introductory rides and reasonable rates starting at $1 per half hour or one trip lasting up to one hour, with 50 percent discounts for students, are being offered.

Investors have experienced nearly 50% stock gains this year in various global hot spots. Defense stocks have surged due to the threat of war with North Korea, while China's real estate investors are on a $200B global spending spree.

Other smaller contenders, such as San Francisco-based Spin, have entered the market due to the potential of the U.S. market. Spin has received $8 million in funding from Grishin Robotics and several early stage technology investors, and has rolled out to Seattle, Dallas, and South San Francisco.

LimeBike's CEO Sun expressed his enthusiasm for the arrival of competitors in the U.S. market, stating that their presence can aid in making the new Chinese-style biking trend more widespread. Sun was motivated to launch LimeBike after witnessing the success of dockless bike-sharing in China.

LimeBikes have been modified for the U.S. market, featuring robust, long-lasting aluminum frames, three gears in most areas, and up to eight gears in hillier cities. They are equipped with solar panels for battery charging, flat-proof tires, and special reflector lights. LimeBike distinguishes itself from competitors with a monthly subscription pricing of $29.95 for 100 rides per month.

Despite being in a young market, LimeBike is close to breaking even in one market, according to Sun.

In the US, local governments mandate bike operators to obtain a permit or license. However, not all cities are accepting the new model, and pilot tests are being conducted in various markets. In China, bike-rental companies are addressing issues such as vandalism, theft, and bikes being left on crowded city streets and pedestrian paths by offering incentives like free rides for proper bike placement.

— Rebecca Fannin, special to bizfocushub.com