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Data mining is why billions are being pumped into dockless bikes

This post originally appeared on BikeBiz.com and is reposted here with permission.

Dockless bike-share schemes are attracting billions in cash injections not because of mobility but because the bikes are used by smartphone-wielding millennials. That's one of the conclusions in a market report on the relatively new sector. "What attracts investors is the integration of rental services with the Internet or mobile Internet, such as GPS and mobile payment," states the report, blandly.

As BikeBiz has reported previously, the second-generation dockless bike-share scene is attracting serious amounts of venture capital because of how the bikes are booked and paid for – they require smartphone apps linked to credit cards. (The second-generation schemes are dominated by Asian companies; the first generation schemes, such as Nextbike, were German.)

Apple invested billions of dollars on iTunes not just to make money from selling music but also to capture credit-card details. And now that Apple Pay – and its Android equivalents – have become commonplace Google and Apple have become more than just computer companies they are now major financial-transaction players. Similarly, Uber is worth billions because it has become an essential app on peoples’ smartphones and it too only works when linked to a credit card. Some transport-share apps track users for a few minutes either side of their journeys, and this will be information that could one day be monetised, investors are banking on.

Mobike public.jpg
Mobike. By Nissangeniss - Own work, CC BY-SA 4.0, Link, via Wikimedia Commons

Mobike’s backers include major players such as Tencent, Sequoia, TPG, Hillhouse Capital, BOCOM International, ICBC International, and asset management firm Farallon Capital. Earlier investors included Foxconn, which manufactures iPhones for Apple.

Ofo is backed by Didi Chuxing, China’s version of Uber, and online retail giant Alibaba. It operates six million bikes in 120 cities in five countries. The company was only founded in 2014 but is already valued at $1-billion. It has more than 20 million registered users.

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