POWER BANK RENTAL STATION, WHAT ABOUT THEM?

Power bank rental companies began to appear three years ago amid ridicule by Chinese netizens. Then in a span of four days in 2017, the industry raised USD 111 million. More charging stations popped up in train stations, hospitals, malls, restaurants and other public spaces. You pay, charge your phone and leave. But mind you, the skeptics are still lurking. As Chinese startups brace up for a “capital winter”, the lens is back on the market for power bank sharing.

The development of the sharing economy

Shared portable phone chargers are no longer the hot topic among venture capitalists. Many companies have given up. LeDian (乐电), for instance, was founded in March 2017 and closed in October the same year. According to business portal ICEO.com.cn, which has published a report on the industry’s situation, the players Laidian (来电), Jiedian (街电 ), Xiaodian (小电) and Guaishou (怪兽) are likely to survive.
On May 5, 2017, when news of Jumei International investing CNY 300 million in Jiedian was out. The son of Wang Jianlin, one of China’s richest tycoons, posted on WeChat: “If shared portable phone chargers can succeed, I will eat my own arm”. The comment was viral.
Three hours later, Jumei’s CEO Chen Ou posted on microblogging site Weibo: “Wang Sicong, thank you for your attention. Entrepreneurship is about taking risks, we know the chances for a startup to succeed are slim.”

After the shared bicycles boom. There was an explosion of startups that focused on the “sharing economy”: shared umbrellas, shared concrete mixers and even shared basketballs. Investors who were late to the shared bikes craze were desperately looking for the next unicorn.

Co-founder of a mobile phone power bank startup based in Shanghai, who prefers to use the alias Hu Tian, said no investor showed interest in his idea in 2015. He had failed to find funds for his startup. However, just a year later, the tide had changed. Investors contacted him so often that it was he who had to turn them down. Hu says the threshold in the industry was low, and most startups only had to show some numbers to get enough financing.

During interviews, CMO of Laidian, Ren Mu, likes to stress that they were the first to come up with the idea back in 2014, before shared bikes were in vogue. In the first half of 2016. The company’s finances were tight, after almost spending the CNY 10 million they had painstakingly raised from the company’s founding team. Facing indifference from investors, the company’s entrepreneurs invested their own money again, CNY 7 million in total. They tried out several locations for renting stations. Eventually, they could lease each power bank 7 or 8 times a day in the best performing locations.

In the second half of 2016, following the success of shared bikes, investment institutions started to pay attention to shared power banks. In April 2017, Laidian received investment from SIG and Redpoint China Ventures.

As opposed to Laidian, which endured many hardships before things started to work, Jiedian had it easy. From its inception, Laidian used smaller stations that could fit on a restaurant table. Users could take the charger with them and leave them in a different station whenever they want. Jiedian, on the other hand, was using a big station in each location, which was not as convenient as the smaller ones. If customers take chargers with them and forget to return, the deposit paid upon registration compensates the companies.

Some companies install big charging stations at malls. Others set up ones that fit on a restaurant table.
Tang Yongpo is the founder of Xiaodian, another player the market is hopeful about. Thanks to his expertise in understanding the shared portable chargers’ industry. He was able to secure a financing of hundreds of millions of yuan from players like Tencent, Sequoia, Gaorong VC and CDH in March 2018. Xiaodian offers charging stations on restaurants’ tables and other venues, but they are not portable. According to Tang, “this model is more convenient than the portable power bank”.

Among investors of Guaishou are big firms such as Gaorong VC, Shunwei and Xiaomi. Thanks to its partnership with Xiaomi, Guaishou has the advantage of supply of reliable and good quality devices.

With such fierce competition, how big can a company grow?

Henry he says when the industry was booming, restaurants, malls and other locations started to charge much higher fees to let companies offer their portable chargers. The most popular spots were charging thousands or even tens of thousands of yuan to allow the presence of a company. The fierce competition led these firms to sometimes offer twice as much as their competitor to set up on a particular spot.