Uber Gets an Uber-Valuation
Car Service Secures $1.2 Billion in Funding, Valuing It at $18.2 Billion, Among Highest Ever
Uber raises $1.2 billion in funding, giving it a valuation of more than $18 billion. Above, Uber's application and logo as displayed on an iPhone 5s and iPad Air. Bloomberg Uber Inc. said it had raised $1.2 billion in additional funding from investors that valued the on-demand car service at $18.2 billion, among the highest valuations ever for a venture-backed startup.
The eye-popping valuation, following weeks of competitive bidding among mutual-fund managers and venture-capital firms, underscores investor interest in the so-called sharing economy, where users sell time or resources to others. Uber connects drivers and riders through a smartphone app. It also highlights many investors' belief that Uber can expand the service into the backbone of a logistics and delivery network for various services.
The latest funding round was led by three mutual-fund managers: Fidelity Investments, which invested about $425 million; Wellington Management, $209 million; and BlackRock Inc., BLK +1.07% $175 million. Four venture firms also participated, according to a person familiar with the matter: Summit Partners; Kleiner Perkins Caufield & Byers; Google Ventures, and Menlo Ventures.
In all, Uber has raised more than $1.5 billion since its founding in 2009. The company said it may sell an additional $200 million in shares. But founder and Chief Executive Travis Kalanick said no insiders, such as early employees, will sell shares as part of this round.
At $18.2 billion, Uber has more than quadrupled its valuation in less than a year and earned an elite place in the world of venture-backed startups. Only Facebook Inc. in 2011 raised capital at a higher valuation from private investors—an investment from Goldman Sachs valued the social network at $50 billion—according to VentureSource data.
Among still-private startups, home-rental site Airbnb Inc., file-storage service Dropbox Inc. and Chinese handset maker Xiaomi Inc. each were valued at $10 billion or more by investors in the past year.
The Billion-Dollar Club The Journal and Dow Jones VentureSource are tracking companies that are valued at $1 billion or more by venture-capital firms.
The outsize investment and valuation also puts pressure on Uber and founder Travis Kalanick to grow and expand. Some investors believe Uber will help usher in an era where people are connected to the physical goods and services of their daily lives through a tap on their smartphones. In addition to transporting people, Uber's network of drivers could become a kind of logistics platform on which other businesses could send packages and food and any number of other products between two points in a city.
In April, Uber began a courier service for deliveries in New York. Mr. Kalanick described the business as still "experimental."
"We're very bullish but that was not part of the pitch for this fundraise," said Mr. Kalanick. "If the logistics business works out, that's icing on the cake.
The financing furnishes Uber with a war chest to fuel an aggressive push for drivers and passengers around the world. Though the company owns no cars and employs no chauffeurs, it has spent money to subsidize cheaper fares in many of its top markets and offer a bevy of perks to entice new drivers, both amateur and professional, to its service. On Friday, the company announced plans to slash prices by 20% or more in most markets.
A higher valuation will help Mr. Kalanick retain a large portion of the company. A serial entrepreneur who failed in his first startup, Mr. Kalanick has sought to keep tight control over Uber even as he has sold shares to a broad array of investors, including Goldman Sachs, Google Ventures, and Amazon.com Inc. founder Jeff Bezos.