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)

The power bank rental market is the latest market war in China

As the whole world is watching China’s heated bike-sharing sector notably with ofo and Mobike as the market leaders, another sharing-economy business model may become the next big thing: power bank rentals.

Beijing-based Xiaodian on Monday raised RMB 100 millions (USD 14.5 million) in Series A financing led by tech giant Tencent and Vision Capital. It is worth noting the speed with which the company obtained financing. Within two weeks, it was able to land millions of USD in financing for both the angel and the Series A round financing. The financing was led by GSR Ventures and Wang Gang, both of which also invested in Didi Chuxing’s angel round.

It is crucial for players in the field to obtain as much financing as possible. The companies also need to act fast to capture the greatest market share by providing preferable services and prices to attract consumers. Players in China include aforementioned Xiaodian, Hidian, and Ankerbox.

Xiaodian’s shared power bank. Photo from Xiaodian.so
Xiaodian’s shared power bank. Photo from Xiaodian.so

Startups like Hidian have also raised considerable financing by focusing on the niche market of power bank rental, where users charge their smartphones after scanning a QR Code and paying online. Both Hidian and Xiaodian charge one RMB (14 cents USD) per hour.

Even though the price per order is low, investors are still interested. It makes sense when you factor in that of every 5 smartphone users in the world, one lives in China. In absolute numbers, that means at least 700 million users in the country alone.

Interestingly, the power bank rental battle imitates the heated bike-sharing race in many aspects. As with the bike-sharing sector, the power bank rental market too has the financial backing of the tech giants in China.

(Top photo from Pixabay.com)

GSR Ventures leads million-dollar angel round for public power bank rental startup Xiaodian, & more

Power bank rental startup Xiaodian receives millions in USD from GSR Ventures and Didi’s investor Wang Gang

Xiaodian

Founder: Tang Yongbo

Founded in: 2016

Financing status: Tens of millions in RMB (millions in USD) in angel round in 2017

Xiaodian is a power bank rental startup that enables users to charge their smartphones easily outside their homes without chargers. Founded in Beijing in 2016, it has so far deployed its power bank rentals in several cities, and its power bank rentals can now be found in subways, canteens, shopping malls, and so on. Users can scan the QR code on the power bank to unlock it for charging without deposit guarantees. Xiaodian aims to deploy 3.6 million power banks across China in 2017, and it will use this as a platform to expand advertising opportunities and enhancing payment development.

Xiaodian’s angel financing round was led by GSR Ventures and Wang Gang who also invested in Didi’s angel round. Xiaodian does not think about making profit now, and it will use this fund to attract new users with deploying more power banks in new cities and improving user experience.

Tumor therapy drug research and development startup Qide receives USD 5.8 M in Series A round

Photo from 58.pic
Photo from 58.pic

Qide

Founder: Qin Gang

Founded in: 2013

Financing status: RMB 40 million (USD 5.8 million) Series A round in 2017

Qide is a tumor therapy drug research and development startup that aims to develop drugs to accurately kill tumor cells. Qide is a Suzhou company founded in 2013, and it is now focusing on developing a new tumor drug that will deal with the current problem in traditional chemotherapy – killing a patient’s normal cells as well as tumor cells. Qide has built a new technology that can greatly improve drug effects for tumor therapy.

Qide’s Series A round was led by Oriza Holdings, and this fund will be used to accelerate its research and development process of tumor therapy drugs.

(Top photo from Xiaodian.so)