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Friday 22 August 2014

Hailo competitor Uber valued at $18bn after fundraising

Published 07/06/2014 | 20:33

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A user scans for an available vehicle using the Uber Technologies Inc.'s app.
A user scans for an available vehicle using the Uber Technologies Inc.'s app.

Uber raised $1.2bn from mutual funds and other investors in a funding round valuing the fast-growing rides-on-demand service at $18.2bn, one of the highest valuations ever for a Silicon Valley startup.

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Uber Chief Executive Officer Travis Kalanick announced the funding round on Uber's blog Friday.

The funding, eclipsed only by the likes of Facebook Inc before it went public, is a vote of confidence by investors in four-year-old Uber's growth potential.

"Uber is one of the most rapidly growing companies ever, and we believe there are opportunities for continued tremendous growth," Joan Miller, a spokeswoman for Summit Partners, an investor in the funding round, said by telephone.

Investors hope the company, which allows users to summon a ride on their smartphones, can expand globally and diversify into logistics.

The investors in the round valued Uber "pre-money" at $17bn, the blog post said. The $1.2bn infusion took the startup's valuation to $18.2bn.

Fidelity Investments put in about $425mn, Wellington Management added $209m and BlackRock Inc contributed $175m, according to a person familiar with the matter.

Venture firms Summit Partners, Kleiner Perkins Caufield & Byers, Google Ventures and Menlo Ventures also participated in the round, a person familiar with the matter said.

Kleiner's investment came from its Digital Growth Fund, run by former stock analyst Mary Meeker, known for her bullish recommendations during the first dot-com boom. Her fund has had recent hits, including traffic app Waze, acquired last year for $1.1bn by Google.

Uber, which did not give details about its latest investors, operates in 128 cities across 37 countries.

Kalanick said he expected to close a second round of funding from strategic investors of about $200mn.

Uber originally started with a luxury town-car service, but in many cities has since added UberX, a low-frills service with nonprofessional drivers using personal cars.

Competitors to Uber include Flywheel and Hailo, which connect passengers and taxis; and Lyft and Sidecar, which link passengers and drivers who use their personal vehicles.

While Uber has grown rapidly since its 2010 launch in San Francisco, it has run into serious regulatory issues. Ordinances keep it out of cities such as Las Vegas, Miami and Vancouver, British Canada.

In some places, including Chicago, San Francisco and Washington, D.C., Uber and similar companies face lawsuits from taxi companies hoping to keep the new competition out.

In Colorado, Governor John Hickenlooper signed a bill on Thursday that legalized drive-for-hire services in consumers' own vehicles, including UberX.

In California, ridesharing is currently regulated through the state's Public Utilities Commission, although taxi drivers and Uber itself are challenging that authority.

Uber sometimes offers promotional deliveries, such as roses around Valentine's Day or Christmas trees. Earlier this year, it launched a regular courier delivery service for small packages in Manhattan.

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