Uber Sets Valuation Record of $17 Billion in New Funding
Uber Technologies Inc. is creating a new category of hot startup: the $17 billion club.
The San Francisco-based transportation service, which lets people order private town cars and other vehicles from their smartphone, has raised $1.2 billion in a new financing led by Fidelity Investments. The funding positions the company at the front of a pack of Internet startups, at a pre-money valuation of about $17 billion, up from $3.5 billion in a financing last year.
Other investors in the new round include Wellington Management, Summit Partners, BlackRock Inc., venture capital firm Kleiner Perkins Caufield & Byers, and existing investors such as Google Ventures and Menlo Ventures. Uber Chief Executive Officer Travis Kalanick said he was keeping the round open to strategic partners that might pitch in an additional $200 million, though he declined to name possible partners.
“This is about capitalizing for the opportunities that we see ahead of ourselves,” said Kalanick, who in the last four years has steered Uber into 128 cities in 37 countries worldwide. “If you can make it economical for people to get out of their cars or sell their cars, and turn transportation into a service, it’s a pretty big deal.”
Uber’s new valuation is a record for technology startups in a direct investment round, said Anand Sanwal, CEO of research firm CB Insights. At $17 billion, Uber is worth more than public companies including car-rental service Hertz Global Holdings Inc. and retailer Best Buy Co. Startups such as cloud-sharing company Dropbox Inc. and short-term rental service Airbnb Inc. have recently raised money at $10 billion valuations.
“It’s a testament to the traction and opportunity ahead of the company,” said Sanwal of Uber’s financing. “Their vision is obviously much larger than just a taxi service.”
The bidding for Uber was so heated that some venture capital and private equity investors bailed out after the valuation soared beyond $10 billion, according to people familiar with the situation, who asked not to be identified because the talks weren’t public.
Uber is garnering new financing to boost growth and expand its operations. Kalanick said he will ramp up in Uber’s existing cities and continue its international expansion. Just this week, the company started operations in Miami, Austin, and Orlando in the U.S., as well as Lille, France, and Tijuana, Mexico.
Kalanick added that Uber would continue to experiment “aggressively” with lowering prices, in an attempt to boost demand and increase the number of trips drivers can make each hour. Uber competes with Lyft Inc., which is also working to reduce prices of trips. Uber is creating 20,000 jobs per month, the company said in a blog post.
Many Silicon Valley startups have landed financing at significant valuation jumps recently. Earlier this week, Zenefits, a year-old company that makes human resources software, was pegged at $500 million, 10 times its previous value from a financing four months ago. Pinterest Inc., an online scrapbooking site, also recently raised $200 million in funding that gave it a $5 billion valuation, up from $3.8 billion seven months earlier.
Kalanick and Garrett Camp founded Uber in 2009 after they couldn’t find a cab during a trip to Paris. The company had earlier raised $307.5 million from investors including Benchmark, Menlo Ventures, TPG Capital and Google Ventures.
Uber has a high-end service for limousines and luxury cars, as well as lower-priced options. The company is also facing regulatory hurdles around safety concerns and protests by taxi drivers’ lobbies in the U.S. and abroad. London’s cabbies are planning a 10,000-car protest on June 11, following similar protests in France, Italy and other European countries.
Uber, which has 900 employees and takes a 20 percent commission from its drivers, recently started a courier service in Manhattan that may be expanded elsewhere.
Kalanick described the courier service, called Uber Rush, as an “infant” and compared it to the company’s first town car service in San Francisco, which he said took a year to develop before it was expanded elsewhere.
To contact the editors responsible for this story: Pui-Wing Tam at firstname.lastname@example.org Ben Livesey