Will power bank rental startups survive as oversupply emerges?

As the bike-sharing battle has seemingly come to a clear conclusion, the competition in another vertical of the “sharing economy”— power bank rentals — has just started.

Earlier this year, investors in China have poured in RMB 1.2 billion (USD 174 million) worth of funds into power bank rental startups within 40 days, local media reported. However, the heated competition has reached a phase where the startups are seeing an oversupply of power bank rentals.

Yuan Bingsong, the founder and CEO of Laidian, said last week at a conference in Hangzhou that the industry has pocketed a massive amount of funds and the competition is getting fierce. However, he suggested that the oversupply situation has emerged.

“When the development of a power bank rental startup hits a certain stage, the situation of oversupply may appear. This has already happened in Shanghai and Beijing,” he said. “This is indeed a problem.”

Founded in 2014, Laidian in April landed USD 20 million in its Series A financing round from SIG and Redpoint Ventures China. The company provides portable power banks for rent that allow users to take away and return the rented power banks at designated stations. Another startup Ankerbox adopted the same approach, while Xiaodian placed fixed charging stations in public spaces such as restaurants and subway stations. Most companies charge almost nothing for the first hour of rental, and charge RMB 1 per hour or so after that.

A Laidian station. Photo from Weibo.
A Laidian station. Photo from Weibo.

In fact, the business model of these power bank rental startups remains unclear. Yuan also suggested that the companies in the industry are not yet ready with their untested business models, and the cycle of product upgrades is longer than expected as well.

“It is hard to ‘end the battle’ this year,” said Yuan in the conference. “It may take two years for winners to emerge,” he added.

Yuan is right. The unclear business models are major hurdles for these startups. It has come down to a race of which company can first figure out its plan to monetize. And yes, speed is key as well. After all, the demand for this convenient service may decrease as technology evolves. Many smartphones nowadays come with long battery lives, and most of them can support one charge per day.

Moreover, it is not much of a hassle to carry our own power banks around as well. This is certainly different from shared bikes which are difficult to carry around but provide users an easier way to commute. It is totally fair to say that there is more demand for bike rental services, but not so much for power bank rentals.

However, these startups do hold an advantage. Power bank rentals do not have regulatory issues like bike-sharing. It is a huge shortfall for bike-sharing startups when it comes to regulations as local governments are not so tolerant towards random parking of bicycles on the streets.

“We surely don’t have regulatory issues,” said Yuan. “But the frequency of usage is a lot less than bike-sharing.”

Yuan’s concern about the oversupply situation is legitimate. The oversupply of power bank rentals available in China’s two major cities has once again proven that the low demand for power bank rentals remains an issue. This is definitely an urgent problem for startups to tackle.

(Top photo from Baidu images)

Used car trading platform DaSouChe receives a whopping USD 180 M for Series D, & more

Used car trading platform DaSouChe receives USD 180 M in Series D round

DaSouChe

Founder: Yao Junhong

Founded in: 2012

Financing status: RMB 12 billion (USD 180 million) Series D financing in 2017

DaSouChe is a used car trading platform that aims to build a transparent secondhand car trading platform for customers in the online-to-offline mode. It provides customers with secondhand car information online, and its offline stores provide customers with professional trading, financing and insurance services. A Beijing company founded in 2012, it is based on big data technology and financing services with more than 510,000 cars traded on this platform. The sum of business transactions amount to RMB 69.6 billion in 2016.

DaSouChe raised USD 100 million Series C financing round led by Alibaba Group’s financial service affiliate Ant Financial and car rental service provider Ucar. This Series D round was led by Warburg Pincus. DaSouChe will use this fund to improve its trading and financing technology.

Power bank rental startup Laidian receives USD 20 M in Series A round

Laidian

Photo from Pixabay
Photo from Pixabay

Founder: Yuan Bingsong

Founded in: 2014

Financing status: RMB 138 million (USD 20 million) Series A financing in 2017

Laidian is a power bank rental startup that focuses on providing an alternative for those who cannot charge their mobile phones while they are outside the home and office after 5 p.m. Most people in China use their phones to shop, pay bills and taxes. Thus, their phone batteries normally go flat before the end of the day, and it can be inconvenient to bring out a heavy power bank with them all the time. A Shenzhen company founded in 2014, Laidian has so far placed its power bank rental terminals in more than 80 cities in China. Most rental terminals are mainly placed in shopping malls, subway and railway stations with more than 20,000 users renting its power banks everyday.

Laidian has collaborated with Ant Financial to enable users to rent power banks without a deposit. Laidian’s USD 20 million Series A financing round was led by SIG and Redpoint, which will be used to set up more power bank rental terminals in new cities.

(Top photo from 58pic.com)