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Car service Uber lands $1.2 billion in new funding

By Michael J. de la Merced
New York Times

POSTED: 07:26 p.m. HST, Jun 06, 2014

Only a few months ago, Silicon Valley startups were celebrated for drawing investors into paying for multibillion-dollar valuations.

But on Friday Uber, the car ride service, climbed to an entirely new level.

The company announced Friday that it had raised $1.2 billion from investors at an eye-popping $17 billion valuation.

It is the biggest haul so far by any member of Silicon Valley's "11-digit club," those companies that have gained valuations exceeding $10 billion. Among them are Airbnb, the home-rental site; Dropbox, the online file-storage provider; and Xiaomi, a Chinese handset maker.

But Uber's new net worth, which excludes the latest round of money, is one of the highest ever attained by a startup.

And it is much higher than it was just 10 months ago, when the company raised money at a roughly $3.5 billion level.

At its new valuation, the 4-year-old service commands a higher worth than traditional car rental companies like Hertz Global Holdings and Avis Budget and almost equal to those of the celebrated tech ventures Twitter and LinkedIn.

Behind the soaring numbers is the hunger of investors with money to burn who are eager for a piece of fast-growing companies. About $10.7 billion was invested into startups in the first three months of the year, the most in at least three years, according to Dow Jones VentureSource.

Much of that money has gone into the biggest businesses in their markets, with investors betting that they will continue to post enormous growth. But some second-place players are cashing in, too: Lyft, a smaller car service provider, raised money from investors like the Chinese e-commerce giant Alibaba Group at a roughly $700 million valuation earlier this year.

Still, few companies have proved as alluring to would-be financial backers as Uber, which four years ago pioneered a new kind of business model, one in which a startup replaced a part of users' daily lives. Its service allows users to call up cars from their smartphones, a category that has swelled with imitators and competitors like Lyft, which operates in dozens of cities.

Uber, co-founded by its chief executive, Travis Kalanick, remains the king of the hill it created. It now runs in 128 cities in 37 countries around the world. And though it began as a dispatch network for professional chauffeurs in Town Cars and SUVs, its most prominent offering is UberX, where drivers use their own cars.

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