It’s a page out of the playbook of Didi Chuxing, the dominant Chinese car-sharing app that burned through US$1 billion in annual subsidies for drivers and passengers during its two-year fight for market share, which eventually pushed Uber Technologies out of China.

“The new feature is expected to attract more people to Mobike,” said the company’s spokesperson Huang Xue. “It can also encourage users to ride their bikes from remote areas to high-demand areas” to help the company adjust the placement of its vehicles, and “build a healthy ecosystem,” she said.

The burn is made possible by the flood of venture capital funds seeking the next big thing among China’s budding internet entrepreneurs. Private equity and venture capital funds invested US$80 billion in China’s technology companies last year.

As many as 30 bicycle-sharing applications have sprouted since 2016 around China, competing for razor-thin operating margins, and at times chalking up losses simply because they want to grab market share.

In the Chinese capital city, the orange Mobike and the yellow-framed Ofo are battling it out for customers. The three-year-old Ofo, backed by a string of companies including Didi, Citic Private Equity, Matrix Partners and Coatue Management, is valued at more than US$1 billion, for renting its bicycles out for 1 yuan per hour.

“There have been too much venture capital money chasing for not too many projects in the recent years,” said Liu Qin, founder of Morningside Ventures, whose investments include Sohu.com and Xiaomi. “Many entrepreneurs offering similar products and services due to the easy access to money. The competition among them eventually become the competition in fundraising.”

Fresh on the mind of every Beijing commuter was the 2016 subsidy war between Uber and Didi, which spoiled users with subsidies of up to 80 per cent of fares.

The subsidies did accustom Chinese users to hailing cabs through their smartphones. The Chinese government became the first major economy last year to legalise app-hailing car ride services. Didi now serves about 1.5 billion rides every year in China through 15 million drivers.

“App-enabled services from food delivery to ride hailing see the fiercest subsidies in China because the smartphone sits at the nexus of online and offline business,” said Nadja Rauscher, senior marketing manager at China Skinny, a Shanghai-based research company. “If you want to better reach Chinese consumers, you need to take control of mobile devices. The subsidy is an important tactic to get market share and to stay in the mind of consumers, which will be paid off in the long run.”

The amount of user data that comes with the large number of customers will be vital, said Li Bin, Mobike investor and founder of Nextev, which envisions itself to be China’s Tesla challenger.

“I don’t think there’s too much bubble in the bike-sharing market,” Li said. “New users come to use Mobike service everyday because of the promotions. How can you call this bubbles?”

“What we are seeing is a race for scale that is fueled by hype and enabled by easy access to money,” said Jeffrey Towson, a private equity investor and an investment professor at China’s elite Peking University.

“The problem with this is there doesn’t appear to be any big advantages to scale. It doesn’t create a service like ride-sharing, with more drivers means shorter waiting times,”he said,adding the craziness in bike expansion will push government to launch regulations to tighten control over the industry.

In Beijing, the local government has already banned users to park such bikes in certain prestigious locations, including Changan Street where Tiananmen Square locates as people tend to park the bikes wherever they want, causing a chaotic scene that is not in line with the image of an international capital city .

Shanghai is mulling to introduce a rule to make bike-sharing companies retire all bikes after three-year use as complaints have been surging regarding the safety of riding such bikes.