Uber is the student who comes in late and goofs off, but still manages to get an A in the class.
The ride-sharing company seemed to take off without much effort when it was founded in 2009 after co-founders Travis Kalanick and Garrett Camp grew frustrated while trying to hail a cab in Paris. Uber first started offering rides in June 2010 in San Francisco, and four months later, it had closed on a $1.25 million seed funding round.
Now, less than 10 years later, Uber has ballooned into the most valuable tech unicorn, a term for companies worth $1 billion or more, but that's in spite of the black spots on its report card from a rough 2017. Uber had such a bad reputation in June that Kalanick was asked to step down from his position as CEO and was replaced by Dara Khosrowshahi, former CEO of Expedia.
Uber has messed up a lot this year. But last week the company reported $2.01 billion in revenue for the third quarter, a 17% increase from the previous quarter, Bloomberg reported. Uber continues to do well despite its many mistakes and shortcomings, and therefore is a company that many people love to hate.
The San Francisco-based tech company got its seed round of $200,000 from its millionaire co-founders.
Camp had co-founded StumbleUpon, a website that recommends content to users and sold to eBay for $75 million in 2007. Along the same lines, Kalanick sold his peer-to-peer file sharing platform Red Swoosh to Akamai Technologies for $23 million the same year.
Uber's first angel round of investment came the following year shortly after it started offering rides in San Francisco. First Round Capital (FRC) led the investment of $1.25 million in Uber at a $4 million pre-money valuation. FRC partner Rob Hayes had invested in StumbleUpon so when he saw a tweet from Camp about Uber, he emailed Camp to find out more about the company and decided to invest $500,000 in it.
Four months later, Benchmark Capital led Uber's first Series A funding round of $11 million at a $49 million pre-money valuation. Benchmark later added to its position for a total $12 million investment in Uber. However, Uber's relationship with Benchmark soured this August after the firm filed a lawsuit against Kalanick that accused him of fraud. The legal filing revealed that Benchmark's $12 million investment is now worth over $7 billion.
In total, Uber has raised $11,562,450,000 over 18 funding rounds, which are listed in the chart below using information from Crunchbase.
|Date||Transaction Name||Number of Investors||Money Raised||Lead Investors|
|Aug. 2009||Seed Round||2||$200,000||Garrett Camp, Travis Kalanick|
|Oct. 2010||Angel Round||29||$1,250,000||First Round Capital|
|Feb. 2011||Series A||6||$11,000,000||Benchmark|
|Dec. 2011||Series B||11||$37,000,000||Menlo Ventures|
|Aug. 2013||Series C||4||$363,000,000||GV|
|May 2014||Series F||N/A||N/A||N/A|
|June 2014||Series D||9||$1,4000,000,000||Fidelity Investments|
|Dec. 2014||Series E||8||$1,2000,000,000||Glade Brook Capital Partners|
|Jan. 2015||Debt Financing||1||$1,6000,000,000||Goldman Sachs|
|Feb. 2015||Series E||10||$1,000,000,000||Glade Brook Capital Partners|
|July 2015||Series F||6||$1,000,000,000||N/A|
|Aug. 2015||Private Equity Round||1||$100,000,000||Tata Capital|
|Feb. 2016||Private Equity Round||1||$200,000,000||Letterone Holdings SA|
|May 2016||Series G||1||N/A||N/A|
|June 2016||Series G||1||$3,500,000,000||Saudi Arabia's Public Investment Fund|
|July 2016||Debt Financing||4||$1,150,000,000||Morgan Stanely|
|April 2017||Funding Round||2||N/A||N/A|
|Sept. 2017||Funding Round||4||N/A||Didi Chuxing, Softbank, Dragoneer Investment Group|
Data source: Crunchbase.
Uber's current valuation
Uber is currently the most valuable U.S. start-up, by a long shot, with a valuation of $68 billion, $37 billion more than the second most valuable start-up, AirBnB at $31 billion, according to PitchBook.
However, Japan conglomerate Softbank is making headlines at the moment for wanting to lead a group of investors in a deal to buy Uber shares from employees and investors at a 30% discount. Softbank wants to scoop up at least 14% of Uber at a valuation of $48 billion.
When a bank buys shares of a company from existing investors those shares are often bought at a discounted rate, but a 30% discount is unusually high. Softbank's $48 billion valuation on Uber could be a result of the company's latest misstep that was made public: failing to disclose a data breach of 57 million customers and 600,000 drivers in 2016 and then paying hackers $100,000 to cover it up. And that's on top of its all-around terrible, horrible, no good 2017.
In February, former Uber engineer Susan Fowler wrote a blog post with sexual harassment claims from her time at the company. In addition, Alphabet's Waymo unit sued the company for allegedly stealing self-driving car secrets. After a video was released of Kalanick yelling at an Uber driver and it was revealed that Uber had been secretly operating in cities it wasn't supposed to operate in, Kalanick resigned in June. To round out the year, the company is now dealing with the previously mentioned data breach of its users and drivers.
While Kalanick was vocal about wanting to push off a potential IPO as long as possible, new Uber leader Khosrowshahi said at the New York Times' Dealbook conference in November that he expects the public offering to come in 2019. "[Uber] has all the disadvantage of being a public company, with the spotlight on us, with none of the advantages," Khosrowshahi said.
Ubers' competitors' valuations
Uber has had to ward off some big-time competitors to keep its position as the most valuable ride-sharing service in the world.
According to CB Insights, the second most valuable private company in the world behind Uber is none other than Didi Chuxing, the China ride-sharing service that's valued at $50 billion. In August 2016, Uber became tired of losing money on its China operations and sold them to Didi Chuxing in exchange for a minority stake in the company.
Behind these top two competitors sits fellow San Francisco-based ride-sharing company Lyft, which raised $1 billion at a post-money valuation of $11 billion. Founded in 2007, Lyft has raised a total of $4,112,500,000 over 13 funding rounds.
Lyft has had a particularly good year, benefiting from Uber's particularly bad year. In January, Uber continued serving customers at New York's John F. Kennedy Airport where taxi drivers were protesting President DoN/Ald Trump's travel ban. People were upset that Uber seemed to be profiting off of the situation. During this period when the #deleteUber campaign was its height, Lyft saw a 60% increase in new users, while Uber had some 400,000 account deletions.
Competition between Lyft and Uber has delayed profitability for both companies. Over just the past three months, Uber lost $1.5 billion, while Lyft only lost $206 million in the whole first half of 2017.
Khosrowshahi told the LA Times in November that Uber will need to keep spending to compete with Lyft. "The U.S. is very competitive right now, between us and Lyft, so I don't see the U.S. as being a particularly profitable market for the next six months," Khosrowshahi said.
Uber is coming out of a truly horrendous year and still managed to grow bookings to $9.71 billion for the latest quarter, up from $8.7 billion in the previous quarter. Perhaps Khosrowshahi can give this unruly student the discipline it needs to become a profitable public company by 2019.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Natalie Walters has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and eBay. The Motley Fool recommends Expedia. The Motley Fool has a disclosure policy.