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Beleaguered Bluegogo CEO hands off ‘bankrupt’ bike firm as money issues remain unresolved

Beleaguered Bluegogo CEO hands off ‘bankrupt’ bike firm as money issues remain unresolved

Beleaguered Bluegogo CEO hands off ‘bankrupt’ bike firm as money issues remain unresolved
November 21
02:43 2017
China bike-sharing startup Bluegogo

Photo credit: Bluegogo.

Cash-strapped bike rental startup Bluegogo is still struggling to pay its staff and refund users, but there’s a new chapter in this saga. CEO Li Gang published an apologetic open letter last Thursday, announcing a strategic partnership with fellow startup Biker.

The partnership will see Bluegogo’s bike operations handed over to its Sichuan-based counterpart. Users will still be able to rent Bluegogo bikes, and once “technical integration” is finished, those who have already paid deposits will be able to rent their bikes for free, wrote Li.

“From the very start of Bluegogo, we have always been on thin ice in the face of two well-funded players,” he said in his letter, hinting at Mobike and Ofo, two bike rental unicorns backed by Tencent and Ant Financial, respectively. “Without support from a wide range of investors and good financial planning capabilities, even the best bike product is powerless.”

“As for the wages I owe everyone, I will try to think of a way to resolve this as soon as possible,” he added.

See: Bike-share startup Bluegogo on the verge of collapse

China’s station-less bike rental industry has seen a dizzying amount of capital raised from both venture capital firms like Sequoia Capital and companies such as Didi Chuxing and Qualcomm. With its overseas operations in Sydney and San Francisco, Shenzhen-based Bluegogo was considered one of the top players in the market.

Once valued at US$140 million, the startup has about 20 million users – many of whom are frustrated about locked-in deposits. In China, Bluegogo charged users around US$15 to use their blue bikes, whereas users in the US paid US$99.

Other bike rental startups in China are using Sesame Credit, Ant Financial’s proprietary credit system, to let users above a certain credit threshold waive deposits. Ofo and Mobike are also working with banks, such as CITIC and China Merchants Bank, to manage their user deposits.

Bluegogo, however, still has to resolve how it plans to refund user deposits and pay its staff. It’s also unclear whether Biker will assume responsibility for its new partner’s deposits in addition to its operations. According to Li, raising money has been difficult, even after contacting “more than a hundred” investment funds.

Biker has also announced that it’s teaming up with Coolqi, another startup with dried-up funds. According to a company statement released today, Coolqi’s bike operations and maintenance will now be handled by Biker.

Tech in Asia reached out to Biker and Bluegogo and will update this article once we hear back.

Converted from Chinese yuan. Rate: US$1 = RMB 6.64.

source : techinasia

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