Uber wants to be the world’s private driving service. Now the company is amassing the war chest to do it. The start-up closed a new $1.2 billion round of financing on Thursday, with investors valuing the company at a staggering $40 billion.
That puts a new mountain of cash on top of the $1.5 billion that Uber had already raised. And it may collect even more: Uber may eventually sell an additional $600 million in stock, and it is working with Goldman Sachs to sell, potentially, another $1 billion in debt to some of the Wall Street firm’s wealthy private clients.
Uber’s ascent is one of the most rapid by a start-up in years. Five years ago, Uber was just an app that allowed customers to summon a private car with the push of a smartphone button. Since then, it has surged in growth to surpass even other members of Silicon Valley’s exclusive 11-digit club — start-ups whose valuations exceed $10 billion.
With the additional money, Uber is setting itself up for what its investors hope will be the next mammoth initial public offering, following in the footsteps of Facebook and the Chinese e-commerce company Alibaba.
The new money, however, comes in the face of a rash of fierce criticism about the company’s approach to users’ privacy. While people briefed on the fund-raising process said that the recent controversy did little to diminish enthusiasm among investors, Uber acknowledged on Thursday that it had more growing up to do.
Raising yet more cash is another step in Uber’s plan to become the world’s premier logistics service, capable of transporting people to places they want to go as quickly and seamlessly as possible. The company has also signaled its ambitions to be a one-stop shop for delivering anything, anytime, anywhere — even groceries — perhaps one day rivaling the likes of Amazon, eBay and Google, all of which run nascent delivery services.
“Millions of people may decide that they no longer need to own a car because using Uber will be cheaper than owning one,” Travis Kalanick, Uber’s chief executive, wrote in a blog post on Thursday announcing the new round of funding.
Uber is by far the car-ride start-up with the largest footprint. In the last year, it has expanded to more than 250 cities in 50 countries. The company, which is privately held, does not disclose its revenue, but said in its blog post that it is six times as large as it was one year ago, and its growth is accelerating.
When the latest fund-raising round is included, Uber is valued at $41.2 billion — or more than S &P’s 500 components like CBS and the grocery chain Kroger.
Besides taxis and limousines, the company faces stiff competition on other fronts. It is up against Lyft — a competitor that offers a similar ride service and is also backed by big investors — in a race to conquer major American cities. Lyft is competing fiercely to lure drivers, passengers and engineering talent away from Uber. Should the start-up need even more money, it will probably have no problem collecting additional cash.