UPDATE 1-China's Hellobike raises $350 mln in latest funding round

* Investors include Alibaba’s Ant Financial

* Fundraising comes as industry faces shake-out

* Hellobike merged with Youon in October (Adds investor details, context)

BEIJING, Dec 4 (Reuters) - Chinese bicycle-sharing firm Hellobike said on Monday it raised $350 million in its latest funding round from investors including Alibaba Group Holding Ltd’s Ant Financial, confounding recent signs of strain in the nascent industry.

The Shanghai-based firm is among a slew of companies that have launched a wave of brightly coloured shared bicycles on to China’s city streets over the past year. However, the sector now faces a shake-out with the third-largest firm announcing last month that it would cease operations.

The latest funding round is the fourth for the one-year old company which merged with Youon Ditan, an affiliate of Changzhou Youon Public Bicycle System Co Ltd, in October in the industry’s first merger. A Hellobike spokesman declined to comment on the firm’s current valuation.

Other investors in the latest funding round included Chinese carmaker WM Motor Technology Co Ltd and venture capital firm Chengwei Capital, Hellobike said.

The company has focused on third- and fourth-tier Chinese cities and said it now has 80 million users.

“The success of this funding round is due to the market’s recognition of Hellobike’s business development potential amid a shake-up in China’s bike-sharing industry,” Hellobike said in a statement.

China’s bike sharing craze has been driven by huge investments, especially into the two market leaders, Ofo and Mobike, which have raised billions of dollars from tech giants including Alibaba and Tencent Holdings Ltd.

The pair are often regarded as China’s “Uber for bikes”, in reference to car-sharing firm Uber Technologies Inc. They have deployed millions of bicycles around the country and pushed overseas into markets such as the United States and Europe.

Reporting by Yawen Chen and Brenda Goh; Additional Reporting by Beijing Monitoring Desk; Editing by Edwina Gibbs and Christopher Cushing