Uber could be mired deep in problems over its rivals, regulators and its rapacious reputation, but those three things combined is not stopping the five-year-old startup from raising yet again another billion dollars in funding.
In a blog post, Uber CEO Travis Kalanick announced that his ride-sharing services company has raised $1.2 billion in the latest round of funding, just six months after its first billion-dollar funding round and less than 18 months after the Google Ventures-led round that raised $250 million. Kalanick did not provide a valuation, but estimates peg Uber to be worth $41 billion. That figure gives Uber a worth that is nearly two times that of older Silicon Valley companies such as Netflix, Twitter and LinkedIn and puts Uber up there right next to the other big boys of the $40 billion club, including Time-Warner Cable and Delta Airlines.
Investors participating in the latest round were not mentioned, but speculations abound that names such as Kleiner Perkins Caufield & Byers, Sequoia, Wellington Management and Menlo Ventures all chipped in. However, the latest funding round could be far from over, as Kalanick says Uber still has "additional capacity remaining for strategic investments." A report made by Fortune reveals Uber could make an additional $600 million in stock as seen in a Delaware filing obtained by VC Experts.
That is not to say, however, that the company's problems will simply go away just because it has mountains of cash. In a rare show of humility, Kalanick acknowledges that Uber's rapid growth also requires a change in the company's culture, which many have criticized as greedy and misogynistic.
"This kind of growth has also come with significant growing pains. The events of the recent weeks have shown us that we also need to invest in internal growth and change," the normally brash Kalanick says. "Acknowledging mistakes and learning from them are the first steps. We are collaborating across the company and seeking counsel from those who have gone through similar challenges to allow us to refine and change where needed."
Most recently, a couple of Uber executives have been publicly panned for making anti-privacy statements. Uber senior vice president of business Emil Michael faced public backlash for suggesting to hire "opposition researchers" to dig up dirt on journalists who write against Uber. Michael apologized, but the cat had been let out of the bag long before that. Hot on the heels of that scandal was another one involving Uber New York general manager Josh Mohrer, who freely used Uber's God View feature to track down the location of Uber drivers and customers.
However, that is only the tip of the iceberg for the ride-hailing company. In many of the 250 cities and 50 countries where it currently operates, Uber is up against transportation regulators and the ages-old taxi industry unhappy with the competition Uber is offering. Unions, insurance companies and a number of competitors, including Lyft, Europe's Hailo and Asia's GrabTaxi, are also threatening to kick Uber off its growth streak.
However, Uber's business model relies on high profit margins with little overhead and easy scalability. Just a year ago, Uber was operating in 60 cities and 21 countries. This means Uber has the means to expand to new markets, which will give it a good fighting stance against its adversaries.
"Even if it's bad press, they're raising awareness of what Uber is among the average American audience," says analyst Julie Ask of Forrester Research. "They have real revenue. They're taking money away from other industries like parking, from people who own cars, from insurance and registration."
