Uber value hits $18.2bn on fundraising
Uber, the taxi app intent on conquering the world, has raised $1.2bn in capital to value the four-year-old San Francisco-based company at $18.2bn, an increase of about $8bn in just weeks. The company said it would raise as much as $1.4bn as strategic investors continued to pile in. Institutional investors, mutual funds and private equity, as well as venture capital investors, have funded the company.
The valuation has soared from about $3.5bn last year, when Google’s VC arm and TPG, the private equity group, led a $258m investment in the company. Travis Kalanick, Uber’s chief executive and co-founder, said it was just the beginning of the “Uber story”. The app, allowing users to summon a vehicle ranging from a limousine to a regular car, is available in 128 cities in 37 countries around the world. It has also talked of expanding into deliveries and other services. Uber’s new price tag makes it worth almost as much as WhatsApp, the messaging service bought by Facebook for $19bn, and more than the $10bn valuation placed on Airbnb and Dropbox in their recent capital raisings. This is despite wavering in the valuations of high-growth tech stocks on public markets, which have punished companies such as Twitter and Workday. Early stage talks with investors valued Uber at about $10bn just weeks ago, according to several people familiar with the discussions. Uber is expected to use the money to fuel its rapid expansion and head off threats from rivals Lyft, Sidecar and Hailo. The $18.2bn includes the $1.2bn raised, giving it a pre-fundraising valuation of $17bn. The company takes a share of the fee for every ride. Financial details leaked last year suggested customers spent more than $1bn on journeys in 2013, with about $200m going to Uber. Uber has faced criticism over its “surge pricing” tactic, which can see customers pay up to seven or eight times the standard price in very busy periods, leading to battles with regulators around the world. As it expands to new cities, it has also confronted the local taxi industry which has fiercely challengedagainst its operations. With our growth and expansion, the company has evolved from being a scrappy Silicon Valley tech start-up to being a way of life for millions of people in cities around the world - Travis Kalanick, Uber chief executive Uber drivers in Brussels were threatened with fines of €10,000, while a Berlin court ruled in favour of the local taxi association by saying the drivers should be classified as rental car businesses not taxis. “With our growth and expansion, the company has evolved from being a scrappy Silicon Valley tech start-up to being a way of life for millions of people in cities around the world,” Mr Kalanick said. “This ‘Uber’ way of life is really a reflection of our mission to turn ground transportation into a seamless service and to enable a transportation alternative in cities that makes car ownership a thing of the past.” Fidelity Investments led the fundraising with $425m with BlackRock, the world’s largest fund manager by assets under management, putting in $175m. The firms will distribute their holdings across several of their mutual funds. Wellington Management also contributed, according to sources familiar with the deal. Traditional fund managers have scrambled to gain access to pre-IPO deals in recent years, particularly since the US Jobs Act allowed companies to stay private for longer. BlackRock’s recent investments include Turn, an advertising technology company, and Lending Club, a peer-to-peer lender; Fidelity was a pre-IPO investor in Facebook. Kleiner Perkins, a Silicon Valley venture capital firm, also participated in the funding round. Bill Gurley, an Uber board member and partner at Benchmark Capital, which was an early investor in the company, said the “rather unusually high valuation” was because some “intelligent” investors liked what they saw in Uber’s financials. “From our perspective, we’re very lucky with its growth trajectory. Of all the companies we’ve been involved with only eBay has anything like the same type of trajectory,” he said. “It is pretty remarkable and rare.”