Uber Raises $1.2 Billion | Adweek Uber Raises $1.2 Billion | Adweek
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Too Legit to Quit: Uber Raises $1.2 Billion

Ride-sharing service picks up big money

Despite nagging questions about its legitimacy and its future, the hot car service/tech startup Uber just raised $1.2 billion.

Uber operates in cities that have attempted to regulate it out of business, and at least one analyst thinks investors should be worried about the risk. “Its entire business is basically illegal,” said Sam Hamadeh, CEO of PrivCo, which tracks the valuations of tech startups.

San Francisco-based Uber—which, since its launch in 2009, has expanded to several dozen markets in North America and 35 other countries—is now worth $17 billion, one of the highest valuations ever for a tech startup. For reference, Pinterest raised $200 million at the $5 billion mark.

Uber founder Travis Kalanick is now likely a billionaire, with another $200 million waiting to pour into the company from private partners, he wrote in a blog post today.

Uber is a sharing-economy pioneer, enabling anybody with wheels to become a professional driver through Uber’s pick-up app. Airbnb—also a sharing-economy darling, one that did for amateur hoteliers what Uber did for wannabe cabbies—just raised $500 million at a $10 billion valuation.

The problem with the sharing economy is the pesky regulations, with Aribnb and Uber facing restrictions in markets like New York and Virginia, which told Uber drivers to stop giving rides. The legal tangles are happening across the world, calling into question who is permitted to serve food, rent rooms and pick up riders.

“VC's investing in the sharing economy will soon encounter the regulated economy,” Hamadeh said. “Business or competitive risk VC's are used to and can take. Government and regulatory uncertainty they cannot.”

Clearly, some major investors disagree. Fidelity Investments and BlackRock invested more than $500 million combined in the latest round. Earlier investors include Google Ventures, Goldman Sachs and Amazon.com founder Jeff Bezos.

Kalanick said Uber is doubling revenue every six months.

“Uber is responsible for directly creating 20,000 new jobs per month and powering billions in economic impact in cities around the world,” he wrote in a blog post announcing the fundraising round today.

Uber’s private valuation is growing faster than almost any company in history. In 2011, it was worth $40 million; last year at this time, it was worth $3.67 billion.

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