How Uber Became the Most Valuable Startup Ever
The sharing economy got a huge vote of confidence Friday.
Car-sharing company Uber has confirmed it closed a $1.2 billion round of funding that makes it, at nearly $18.2 billion, the most valuable startup ever, following a direct investment round.
Yes, that's right: $18.2 billion (Although Uber reports a preinvestment value of $17 billion.) To put that figure in perspective, car rental company Avis is only worth a paltry $6.3 billion. And, as my colleague Ilan Mochari reported Wednesday, Uber's valuation is now ahead of startups Dropbox and apartment share concern Airbnb, whose value is a measley $10 billion.
Word had been percolating all week that Fidelity Investments would lead the round. That's confirmed, along with the participation of other investors such as Wellington Management, Summit Partners, BlackRock, Kleiner Perkins Caufield & Byers, Google Ventures and Menlo Ventures, according to Bloomberg.
Chief executive Travis Kalanick had this to say on his blog today:
The total raise will be about $1.4B with a second close of strategic investors soon. We are thrilled to have top-tier institutional investors, mutual funds, private equity and venture capital partners joining us.
Congrats, Travis. It's got to be thrilling, if not a little worriesome. Not just becuase that huge chunk of change is difficult to wrap your head around, but because investor appetite for tech stocks has caved in recent weeks. Plus, the car share industy overall has been hit with a steady flow of problems.
Just two days ago, news broke that an Uber driver may have kidnapped a very inebriated fare and sexually assaulted her in a hotel room. Texas has filed suit against Uber and other car share companies claiming drivers may discriminate against handicapped passengers, whom their vehicles can't accommodate.
And Yesterday Colorado became the first state to pass laws regulating operations of car share companies. In case you forgot, Uber got to its crazy, massive vlauation by bypassing regulations such as how much insurance they need to hold to cover passengers in case of accidents. Or by acting confused about whose responsibility it is in the first place when people get hurt. An app is just an app, after all.
Though, when $18 billion are getting bandied about, you probably have lot more on your mind than these little peccadillos. And the venture capital world knows a good thing when they see it: An industry that can grow quickly because it has few regulations and little oversight.
Even Colorado's Governor John Hickenlooper puts Uber first. "Consumer protection is a worthy goal that we endorse, but rules designed to protect consumers should not burden businesses with unnecessary red tape to stifle competition by creating barriers to entry," as he said in a statement on Thursday.
Will he live to rue these words? Uber and its investors dont' seem to think so.