BEIJING (BRAIN) — Ofo, the world's largest and best known dockless bike share operator, is struggling financially, in part due to demands for deposit refunds from customers in markets where Ofo has stopped operating. According to multiple news reports, company founder Dai Wei sent an email to employees on Wednesday acknowledging the cash flow challenges and mentioning that he had contemplating filing for bankruptcy.
"Due to our misjudgement of the overall situation ... the company has been under huge pressure on cash flow throughout the year," Wei said in the email, which recipients posted to social media. "To return users' deposits, pay back to suppliers, and keep our business up and running, we had to turn every yuan into three. Countless times, I thought about cutting down the operation budget in order to refund users and pay our debts. I even considered filing a bankruptcy."
Chinese media reports that hundreds of people have lined up outside Ofo's headquarters, waiting in line to demand refunds of their deposits.
Ofo was founded in 2014 and by 2017, it claimed to be operating over 10 million bicycles in 250 cities and 20 countries. The company was valued at up to $2 billion at one point. But in 2018, it began to scale back, withdrawing from most U.S. cities and several other countries. In July it let go about 70 percent of its U.S. employees. In several communities, Ofo donated its remaining bikes to nonprofit groups after it pulled out, although photos of piles of scrapped bikes in Dallas and other cities drew media attention. In March this year, Ofo was either expelled or voluntarily left the North American Bikeshare Organization because of a dispute over policy.
Several of Ofo's bike and equipment suppliers have sued the company this year over canceled orders and late payments. Ofo's largest rival in China, Mobike, also has recorded losses this year.
