Documented cause
ofo was founded in 2014 by Dai Wei and four co-founders at Peking University, pioneering the dockless bike-sharing model — users locate bikes via app and leave them anywhere. The company scaled from campus to global phenomenon, raising approximately $2.2B from Alibaba, SoftBank Vision Fund, DiDi Chuxing, and Xiaomi, reaching a $3B valuation in 2018. The model was structurally uneconomic: user security deposits (¥99-199) funded operations in a Ponzi-like structure, over 95% of bikes required replacement within 12-18 months due to vandalism and neglect, and per-ride fees were too low to cover fleet maintenance costs. As fundraising dried up in late 2018, ofo could not pay suppliers, reimburse user deposits, or maintain its fleet. A queue of 12 million users waiting for deposit refunds formed online. Dai Wei refused to file for formal bankruptcy for years, leaving the company in legal limbo.
Alternative account: ofo operated over 10 million dockless bicycles across 250 cities in 20 countries, raising $2.2B from Alibaba, Didi, and SoftBank. The dockless model generated massive vandalism and theft losses. Without docking infrastructure, bikes were left in rivers, piled in warehouses, or locked to private property. Competing Chinese players Mobike and Didi bike flooded the market simultaneously. ofo burned through capital at $50M+ per month, retreated from international markets, and left over 10 million users unable to recover their ¥200 platform deposits. The company entered Chinese court proceedings in 2019.