Uber Technologies is creating a new category of hot startup: the $17 billion club.
The San Francisco-based transportation service, which lets people order private town cars and other vehicles from their smartphone, has raised $1.2 billion in a new financing led by Fidelity Investments. The funding positions the company at the front of a pack of Internet startups, at a pre-money valuation of about $17 billion, up from $3.5 billion in financing last year.
Other investors in the new round include Wellington Management, Summit Partners, BlackRock, venture capital firm Kleiner Perkins Caufield & Byers, and existing investors such as Google Ventures and Menlo Ventures. Uber CEO Travis Kalanick said he was keeping the round open to strategic partners that might pitch in an additional $200 million, though he declined to name possible partners.
This is about capitalizing for the opportunities that we see ahead of ourselves, said Kalanick, who in the past four years has steered Uber into 128 cities in 37 countries worldwide. If you can make it economical for people to get out of their cars or sell their cars, and turn transportation into a service, its a pretty big deal.
Ubers new valuation is a record for technology startups in a direct investment round, said Anand Sanwal, CEO of research firm CB Insights. At $17 billion, Uber is worth more than public companies including car-rental service Hertz and retailer Best Buy. Startups such as cloud-sharing company Dropbox and short-term rental service Airbnb have recently raised money at $10 billion valuations.
Its a testament to the traction and opportunity ahead of the company, Sanwal said of Ubers financing. Their vision is obviously much larger than just a taxi service.
Uber is garnering new financing to boost growth and expand its operations. The service launched in the Triangle in April. Kalanick said he will ramp up in Ubers existing cities and continue its international expansion. Just this week, the company started operations in Miami, Austin, Texas, and Orlando, Fla., as well as Lille, France, and Tijuana, Mexico.
Kalanick added that Uber would continue to experiment aggressively with lowering prices, in an attempt to boost demand and increase the number of trips drivers can make each hour. Uber competes with Lyft, which is also working to reduce prices of trips. Lyft also operates in the Triangle. Uber is creating 20,000 jobs per month, the company said in a blog post.
Kalanick and Garrett Camp founded Uber in 2009 after they couldnt find a cab during a trip to Paris. The company had earlier raised $307.5 million from investors including Benchmark, Menlo Ventures, TPG Capital and Google Ventures.
Uber has a high-end service for limousines and luxury cars, as well as lower-priced options. The company is also facing regulatory hurdles around safety concerns and protests by taxi drivers lobbies in the United States and abroad. Londons cabbies are planning a 10,000-car protest on June 11, following similar protests in France, Italy and other European countries.
Uber, which has 900 employees and takes a 20 percent commission from its drivers, recently started a courier service in Manhattan that may be expanded elsewhere.