The problem
ofo cracked the last-mile problem with dockless rentals: no docks, no kiosks, just yellow bikes unlocked by phone. At its peak it defined what bike-sharing looked like in Chinese cities — and then exported the model to 21 countries.
How it works
Users put down a 99-yuan deposit, scanned a QR code to unlock a bike, and left it wherever their trip ended. ofo bought, deployed and maintained the fleet itself, scaling from Peking University campuses to hundreds of cities worldwide on venture money.
Pain points
Riders loved the convenience until they wanted their deposits back; cities were left with mountains of abandoned bikes; and the deposit float that funded expansion became a liability the moment trust broke.
Business model
Ride fees topped up by the enormous interest-free float of rider deposits — tens of millions of 99-yuan payments that functioned as unsecured loans to the company for as long as nobody asked for them back.
Why it worked (or didn’t)
It didn’t. Having raised more than $2 billion, ofo burned through cash buying bikes and entering new markets, and in 2018 it came crashing down: deposit-refund requests turned into a bank run with lines outside ofo offices across China, founder Dai Wei departed mid-crisis, and a bankruptcy application against the company surfaced in April 2019. The rental service collapsed; licences were suspended and assets seized or melted for scrap. From February 2020 the rump firm pivoted to a strange e-commerce app where users could only recover deposits by spending more money inside it.
Challenges
Growth-first expansion with no path to per-bike profitability; a deposit model that converted a cash crunch into a consumer-protection scandal; leadership churn at the worst moment; and a zombie afterlife that kept promising refunds while withholding them.
Funding
- Raised: more than $2B by 2018 (Sixth Tone).
- Valuation: estimated $3B at peak (TechNode, Feb 2020).
- Status: closed — bike-rental operation collapsed; millions of deposits never repaid.
Latest — November 2021
Nothing new to report — the company remains a cautionary tale. The last citable milestone is Sixth Tone’s November 2021 report that ofo, three years after its rental service collapsed, still existed as a half-built e-commerce app telling users they could recover deposits only by getting friends to pay the company more money.