News Column

United States : UBER raises $1.2 billion pushing its value to $18.2 billion

June 10, 2014



Uber has raised $1.2 billion in funding, pushing the value of the controversial startup to $18.2 billion, one of the largest valuations ever for a venture-capital-backed company.

The investment underscores the appeal to investors of ride-sharing services that build smartphone apps to connect passengers and drivers, despite the widespread regulatory opposition and incidents that raised questions about the safety of such services.

It's the most-valued startup. The $1.2 billion investment, Uber's fifth fundraising round, was led by Fidelity Investments and included BlackRock and Kleiner Perkins Caufield & Byers, as well as Google Ventures, which threw in cash for the second time.

Uber said it expects to close another deal that will bring the total investment to $1.4 billion and nudge its valuation to $18.4 billion. This puts Uber's worth at twice than that of Dropbox and Airbnb and Xiaomi, which have the second-highest valuation at $10 billion each.

Uber is worth more than rental car companies Hertz, which has a market value of about $12 billion, and Avis, which is worth $6 billion. The valuation is a ringing endorsement of the sharing economy, which refers to a wide range of companies that use social networks and smartphones to offer everything from clothes to rooms, with business models that connect those with something to offer with those who want something.

Investors are holding their nose and investing in Uber looking for a big payoff, and not considering the massive risk. Uber is not the clean investment that VCs wish they had.

Yet as more riders dump city cabs, and even their own cars, for ridesharing, investors are confident that consumer demand will continue to drive regulatory changes. Lyft raised the second-largest venture investment in the 1Q of this year, $250 million from a group that included Alibaba and Andreessen Horowitz.


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Source: TendersInfo (India)