And so it begins. Chinese media report that Bluegogo, the nation’s third-largest dockless bike-sharing startup, has ceased operations, becoming the first major casualty in a fast-paced tech sector many analysts warn is hurtling towards a reckoning.


Bluegogo was among nearly 30 Chinese startups allowing users to rent bikes with smartphones and leave them wherever they like. The company launched in 2016 with more than $90 million dollars in venture funding. At its peak, Bluegogo claimed 20 million registered users, deployed more than 700,000 bikes, and launched operations in San Francisco and Sydney as well as China.

小蓝单车在两个海外城市的扩张尝试均以失败告终。在旧金山,它遇到了来自当地政界人士的巨大阻力,短短四个月后便偃旗息鼓。在悉尼,小蓝单车的做法是向当地共享单车公司Reddy Go提供自行车,但Reddy Go随后中断了和小蓝单车的合作谈判,转而选择了另一家自行车提供商。

Bluegogo’s attempts at global expansion both ended in failure. In San Francisco, the company ran into stiff resistance from local politicians and suspended operations after only four months. In Sydney, Bluegogo supplied bicycles for local bike-sharing venture Reddy Go, but the Australian firm broke off partnership negotiations and dropped Bluegogo in favor of another bike supplier.


But the full extent of Bluegogo’s financial difficulties in its home market didn’t emerge until this week, when Chinese social media erupted in complaints about the company. Users fumed that the Bluegogo app no longer unlocks bikes and that the company isn’t responding to requests for refund of their deposits. Chinese media descended on Bluegogo headquarters in Beijing to discover offices locked and abandoned. Chinese press report that the company dismissed staff on Wednesday. multiple senior Bluegogo executives confirmed that they have left the company. According to several reports, Bluegogo owes $300,000 in office rent. A Bluegogo bike supplier told the Global Times the company owes it more than $1.5 million.


In a public letter released Thursday night, Bluegogo chief executive Li Gang said the company was being acquired by another Chinese firm. “As a CEO, I’ve made mistakes,” Li wrote. “I was filled with arrogance.” He denied reports that he had fled the country.


China Money Network reports that Bluegogo raised $58 million in February led by an aptly named Beijing-based venture fund Black Hole Capital, and Smart Xintong, a Shenzhen-based healthcare equipment developer. The investments valued Bluegogo at $140 million.


Bluegogo’s crack-up follows the collapse of several smaller Chinese bike-sharing companies within the past six months, including Wukong, 3vBike, and Ding Ding. Many analysts predict the industry is headed for a bloody consolidation in which only one or two players survive. The sectors two giants—Mobike, backed by Tencent Holdings, and Ofo, backed by Alibaba Group—have each reached raised roughly $1 billion in funding and are widely tipped as the industry’s final victors.


Over the past 18 months, China’s bike-sharing industry has rolled out with astonishing speed as rival companies saturate city streets with a riot of orange, yellow and blue cycles. Many have launched operations overseas in locations including Boston, Washington D.C., Singapore and Kuala Lampur.


There were clear signs of lax management at Bluegogo. The company ran in to trouble with a bizarre summer promotional campaign that replaced some of the bike icons on its app with icons for tanks, offering prizes to users who rode bikes depicted by tanks.


But in China’s bikes-sharing sector, even well-managed ventures face an uphill climb. It has long been clear that the sector is a bubble, with far too many players backed by far too much venture funding chasing far too little profit. A shakeout was inevitable. The real question is whether Bluegogo’s collapse portends a similar consolidation in other Chinese Internet sectors.