Uber clearly does not subscribe to the ‘mo money ‘mo problems theory. The company has raised another $1.6 billion dollars, this time in a convertible debt round from Goldman Sachs according to Bloomberg sources. It’s a loan that will turn into a stake in the company when Uber goes public, at a 20 to 30 percent discount on Uber’s IPO valuation. It adds to the company’s warchest, bringing its total funding up to more than $4 billion, with the company still working to raise another $600 million in the near future from hedge funds.
At $40 billion, Uber is believed to be four times more valuable than Airbnb, Snapchat, Palantir or Dropbox. Its valuation is eight times larger than Pinterest’s, fifty-seven times larger than Lyft’s, 100 times larger than Instacart’s.
The news sent the tech world into a tizzy. People called Uber’s new valuation eye-popping, ridiculous, absurd. Just like Uber’s last round of funding, it was heralded as proof of a bubble, an upcoming crash, the tech apocalypse, etc.
But when you plot Uber’s valuation compared to big public tech companies, it looks less dramatic. [company]Amazon[/company], [company]Facebook[/company], [company]Microsoft[/company], [company]Amazon[/company], [company]Oracle[/company] and others are — as you’d expect from mature companies — much larger by market cap than Uber’s current valuation. Twitter is much smaller. Investors are essentially saying that they think Uber will be nearly as valuable as [company]Yahoo[/company] or [company]eBay[/company] and more valuable than Twitter when it goes public. It’s not a totally outlandish conclusion for them to bet on, given current tech hype and market trends.
Uber’s staggering valuation says more about the changing nature of tech fundraising than it does about Uber investors’ ridiculousness. Companies are staying private longer, choosing to develop their product outside of the prying public market’s eyes. Uber is leading that trend, a pioneer for a new kind of growth model.
Without much precedent, it’s hard to know what Uber’s eventual IPO will look like. It has more money and time to hone its business, so it’s not entirely fair to compare is to the IPOs of yesteryear and call its valuation outsized. We’re playing by a new set of rules.
There’s another way to look at Uber’s valuation. CEO Travis Kalanick isn’t content for his company to remain a car-hailing app. He plans to move into urban logistics and shipping, doing everything from delivering food to transporting supplies. When Uber drops off kittens on National Cat Day, it’s not just a publicity stunt — it’s logistics testing.
On that note, perhaps Uber should be compared to public transportation, logistics and automotive corporations. Companies like [company]Ford[/company] and [company]Tesla[/company] are distant cousins to Uber, but given that Kalanick wants Uber to replace car ownership, they may be competitors down the line. The same goes for [company]FedEx[/company] and [company]UPS[/company].
Uber’s valuation puts it at less than half the market cap of UPS, but close to the market cap of FedEx ($51 billion). From an automotive standpoint, the numbers are even more optimistic, with Ford and [company]General Motors[/company]’ market caps not that much bigger than Uber’s valuation. Tesla and Hertz’s market caps, $29 billion and $11 billion respectively, are smaller than Uber’s $40 billion valuation.
Uber’s investors are essentially saying that they think when the company goes public, it will be worth at least half as much as GM and Ford and more than Tesla and Hertz.
Undaunted by its current media storm, Uber has continued to raise its next round of funding, another $1 billion, according to Bloomberg sources.
Yik Yak has reportedly raised a whopping $62 million in venture in a round led by none other than Sequoia. This funding round matters because it brings the previously ignored company front and center in Silicon Valley.
In what may be a private company money-raising record, Uber is reportedly raising yet another round. You may be asking yourself — wait, didn’t they just raise $1.2 billion? Yes, that was in June. And according to Financial Times sources, now Uber supposedly wants to raise another $1 billion, aiming for a $17 billion valuation to help fuel its international growth. Normally at this point a company would go public to get the revenue for that level of scale, so it’s not entirely clear why Uber is choosing the private funding route.
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Maybe it’s not doing so bad after all: All Things D‘s Kara Swisher reports that Fousquare has closed a $35 million Series D round, led by DFJ Growth and the Capital Group’s SMALLCAP World Fund. Swisher says that the round does not significantly raise the previously estimated $600 million value of the company, but it’s definitely better than the $41 million in convertible debt it took earlier this year. Crowley told Swisher that the money “validates” Foursquare’s transformation into a “smart” passive location app, but it’s still early days — Foursquare still needs to perform before that will be true.
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