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Thanks to the boom of the sharing economy, a new landscape has emerged in China. Colorful bikes now flood its streets, subway stations, and bus stops due to dockless bike-sharing. The pedal-powered phenomenon has become a popular option for Chinese people who are traveling short distances.

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So just how much are investors willing to put in this manual mode of transportation? Ride with us to find out.

The Current Market

Unlike conventional bike-renting, riders are not required to return bikes to fixed docking stations. Instead, you download an app, and unlock bikes by scanning a QR code. A GPS chip, inserted into each bike, allows users to locate bikes nearest to them. After paying a refundable deposit— ranging from 99 RMB ($14.3 USD) to 299 RMB ($43.2 USD)—the cost of riding a dockless bike can be as low as 1 RMB (less than a quarter USD) per hour.

With at least a dozen active startups in the space, China’s bike-sharing market is extremely crowded. The success of major players in raising money and attracting riders has led copycats to emerge one after another.

But for now, let’s take a look at how much money has gone into the three largest bike-sharing startups in China.

Breaking Down the Money

The chart below compares the amount of money raised by Bluegogo, Mobike, and Ofo, the three most popular bike-sharing startups in China. The graph only takes into account the disclosed funding rounds and are converted based on the RMB to USD rate as of July 20.

Per the chart, there is a jarring difference between the two leading players and the current third-place player. Mobike, the second largest bike sharing startup in terms of funding, exceeds Bluegogo by almost $840 million in funding. And Ofo has raised even more than Mobike, with an additional $227 million filling its coffers.1

Although there is no single, exact reason that explains why Ofo and Mobike have raised so much more than Bluegogo to date, the disparity can be partially explained for a few reasons:

Ofo and Mobike, respectively founded in 2014 and 2015, were the initial bike-sharing startups founded in China, whereas Bluegogo didn’t enter the market until 2016. Venture capitalists tend to move in groups. Once an idea has gained some traction and trust from prominent VCs, other investors often follow suit. It’s very common for rival companies to invest in competing products, which may explain why Tencent and Alibaba took their rivalry into the bike-sharing market. Mobike received a $600 million Series E and $215 million Series D from lead investor Tencent Holdings. Meanwhile, Ofo received its $700 million Series E from Alibaba and an undisclosed amount from Ant Financial, Alibaba’s financial arm.

All three bike-sharing companies launched their Series A rounds around the same time, with a two or three-month standard deviation. But Mobike and Ofo have already finished their Series E rounds, while Bluegogo is yet to go through its Series B. Since Mobike and Ofo are rapidly scaling and preparing for international expansion, it makes sense for them to have arrived at later-stage funding rounds.

The following chart tells a similar story of how Mobike and Ofo are overshadowing Bluegogo’s path to raising funds:

The Role of Lead Investors (Beyond Money)

So how much do lead investors really matter in the bike-sharing arena? Yes, they do put in the most capital, pick up board seats, set the price of the funding round, and lead terms discussions. But money aside, lead investors can provide valuable resources that serve to a company’s competitive advantage.

For example, Tencent, one of Mobike’s lead investors, also happens to own WeChat, the largest social app in China. WeChat integrates payment, game, chat, and almost any social network function you can think of. Tencent allows users to access Mobike through the WeChat “mini program.” By reducing onboarding friction, Mobike may be able to pick up new users more quickly and cheaply than its competitors.

On the other hand, Ant Financial, Alibaba’s finance-focused affiliate, invested in Ofo in April, and its parent company followed as the Ofo’s lead investor in the Series E round. Through its strategic partnership with Ant Financial, the creator of Alipay, Ofo has incorporated Ant Financial’s credit-rating system to let qualified users rent bikes without making a deposit.

A Bike-sharing Bubble?

Yesterday, Ofo is reported to be in talks to raise $1 billion led by Japan’s Softbank Group. Didi Chuxing, China’ s biggest ride-hailing company, may also join this new round of fundraising, which could bring Ofo’s valuation up to $3 billion. However, the high valuation stands on fragile ground, since the Chinese bike-sharing startup is not making money and still plans to prioritize expansion over profit-making.

If the fundraising rumors are true, it would be interesting to witness how Ofo will leverage the strengths of its new lead investors and how Mobike and its investors will react.

If history holds, those investors will answer with more capital. And if they do, the bubble talk will continue until the market proves itself, or the companies in question hit a bump in the road and begin to deflate.

Ofo announced it is in talks to raise additional capital. We did not include this data since the money has not yet been raised.

Illustration: Li-Anne Dias