Uber Inc. has confirmed today that it has raised $1.2 billion from mutual funds and other investors led by mutual-fund giant Fidelity Investments in a funding round valuing the fast-growing rides-on-demand service at $18.2 billion.
The company’s CEO Travis Kalanick claimed in a blog post on Friday that the funding round raising $1.2 billion of primary capital at a $17 billion pre-money valuation. The total raise will be about $1.4 billion with a second close of strategic investors soon.
“With our growth and expansion, the company has evolved from being a scrappy Silicon Valley tech startup to being a way of life for millions of people in cities around the world. 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,” said Kalanick.
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., $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.
After many weeks of severe competitive bidding, this astonishing valuation underscores investor interest in the so-called sharing economy, where users sell time or resources to others. Actually, Uber’s new valuation is a record for technology startups in a direct investment round, said Anand Sanwal, CEO of research firm CB Insights.
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.
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, reports Bloomberg.
“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 Verge notes that Uber’s biggest rival, Lyft, raised $250 million back in April, a move that put its cash pile on par with Uber. It’s unclear if Lyft plans to raise again now that Uber has acquired this massive war chest, but it has certainly fallen far behind in the battle of the best-funded taxi apps.
The San-Francisco based company was founded four year ago and operates in 128 cities in 37 countries around the world. Uber connects drivers and riders through a smartphone app, but also plans to expand beyond offering taxi and black car rides to several areas of transportation and logistics, from family carpools to delivering air conditioners.
Uber is also experimenting with new services, like its UberRUSH courier service or its UberFAMILY child seat offerings in New York City. Based on the success of those programs, Uber could make those offerings available in additional markets.