LimeBike raises $12 million to roll out bike sharing without kiosks in the US

A startup called LimeBike has raised $12 million in venture funding to make Chinese-style bike sharing mainstream in the U.S. Andreessen Horowitz led the round, joined by IDG Ventures, DCM Ventures and other investors who declined to be named.

In China, companies like MoBike and Ofo have raised massive amounts of venture capital and distributed tens of thousands of their GPS-enabled bikes in urban markets. The bikes do not have to be retrieved and returned at docks like they do in major U.S. bike-sharing programs, such as the Citibike initiative with Motivate Co. in New York.

According to LimeBike co-founders, chairman Brad Bao and CEO Toby Sun, the startup is working with the Bay Area bicycle coalitions, and other advocacy groups, to forge strong relationships with different cyclist communities across the U.S.

LimeBike, which is based in San Mateo, Calif., is entering an increasingly crowded market. Competitors offering kiosk-free bike sharing in the U.S. include Social Bicycles, Spin, Bluegogo and Zagster. And Motivate Co., the domestic leader so far, is still expanding its bike-share programs with kiosks, locking in exclusive contracts with cities, typically, wherever they go.

For its rollout this April, LimeBike has designed bicycles with GPS- and 3G-connectivity; foam core tires that aren’t at risk of deflating; a large metal basket for carrying cargo; an on-board solar panel and smart lock. Customers will pay $1 for every 30 minutes of use. They can fire up LimeBike’s mobile app to locate a nearby bike, use a QR code to unlock the bike, then lock it up, freestanding, at their destination. The bikes have a center kickstand, so users won’t have to chain them to street signs or racks.

The startup works with outside manufacturers and vendors for components, but designed and assembled the bikes on their own. LimeBike has no immediate plans to sell the GPS-locatable bikes as a consumer product.

Sun said, “Our team has tons of experience working at high-tech companies like Facebook, Square and Tencent. We know what it takes to get the app right, and to make products that work for the U.S. market in general. But we have also spent time with the services in China, and can see what will work and won’t work for big cities that want to increase bike use and decrease traffic.”

Andreessen Horowitz partner Jeff Jordan said LimeBike’s trade knowledge impressed him. “There is extensive competitive interest in bike sharing. Nobody in this market will win on patents. It’s all about the execution.” An avid mountain biker himself, the investor said LimeBike is tapping into “mega trends” like urbanization, and a millennial view of transportation which is more about getting from A to B in the most convenient way possible, and less about car ownership than earlier generations.

LimeBike chairman Brad Bao said the company will use its funding to prove the company’s bikes and service work well in a subset of U.S. locales, mostly cities and towns with large college or corporate campuses. They will also be gathering extensive data on the use of Lime Bikes in order to demonstrate advantages to cities and towns, including impacts on traffic and fitness in their communities.

Some towns — fearing that bikes will be dumped all over their streets and sidewalks without concern for traffic, safety and aesthetics — are hostile to bike-share programs without designated kiosks. In San Francisco this week, new rules were introduced that would require kiosk-free bike-share companies to obtain a city permit before rolling out their goods. The city will issue tickets to companies for bikes left where they’d block normal “right of way” foot or vehicle traffic. And non-permitted bikes will be hauled off under the new rules.