Uber, the ride-hailing service, likes to trumpet its popularity with
consumers. Their fervor is surpassed, perhaps, only by investors’.
Facing overwhelming demand from institutional investors, Uber has expanded
its Series E round of venture financing by $1 billion, according to
documents filed Wednesday with the Delaware secretary of state, bringing the
total capacity for the round up to $2.8 billion.
The move, which was confirmed by Uber, occurred just weeks after the company
closed a $1.2 billion round of financing. At the time, Uber said it had
left capacity for about $600 million in additional strategic investments,
according to a Delaware filing. The company is incorporated in Delaware and
based in San Francisco.
But the appetite for a piece of Uber has proved to be greater than the
company had imagined. The $600 million was quickly oversubscribed, and Uber
decided to raise the amount. Baidu, the Chinese Internet giant, accounts for
part of the additional investment beyond the $1.2 billion round.
The most recent expansion is on top of some $4 billion Uber raised,
including a recent $1.6 billion round of convertible debt financing from the
clients of the private wealth arm of Goldman Sachs, the investment bank
previously confirmed.
Uber’s $40 billion valuation, extraordinary by any private technology
company’s standards, remains unchanged since the company announced the
first part of the round in December. Uber is one of the most richly valued
private technology start-ups, second only to Xiaomi, the Chinese smartphone
manufacturer.
“The participation we have seen in Uber’s Series E underscores the
confidence investors have in Uber’s growth,” Nairi Hourdajian, the head of
global communications at Uber, said in a statement.
Even in Silicon Valley’s recent venture capital environment, where hundreds
of millions of dollars and high valuations seem much easier to come by,
Uber remains an anomaly. The company has raised close to $5 billion in
private financing since it was founded in 2009, and it appears in no hurry
to introduce itself to the public markets.
Uber is likely to need full pockets to continue its rapid growth.
The company is working to expand UberPool, its ride-sharing initiative that
links multiple passengers heading toward the same destination and lets them
split the cost.
Uber has also said it intends to bolster its European operations and push
into the Asia-Pacific region.
It can expect to meet opposition. Uber faces stiff resistance from taxi and
limousine interests in countries like Spain, Germany and Belgium, among
others, and will probably need to spend heavily to market itself to win
favor with locals.
To do well in China, the world’s most populous country, Uber will probably
have to spend heavily to take on services like Kuaidi Dache and Didi Dache,
China’s two largest taxi-hailing services, which recently announced plans
to merge. That deal, if completed, would give the two services more than 90
percent of the market.
Meanwhile, Uber’s largest United States competitor is also raising money.
Lyft, identified by its signature pink mustache logo, is trying to raise at
least $250 million in private capital, with participation from at least one
previous investor, the Alibaba Group of China.
