Uber is raising money faster than a Formula 1 race at the moment – and boy are there are a lot of investors who want to get a slice of the taxi startup’s pie. It has just raised $1.6bn (£1.1bn) in convertible bonds from Goldman Sachs’ private wealth clients, according to various reports, having hailed $1.2bn in equity financing only one month ago.
That put the five-year-old company’s worth at a staggering $40bn and came after it raised $1.2bn at a valuation of $17bn in June. Oh and it’s still in talks to add another $600m in equity funding to the pot of gold at the end of the ride-hailing rainbow, according to Bloomberg.
It’s not just financing that’s flying through Uber’s greasy fingers either. Rumours put its 2014 revenues before paying drivers at anything from $1.5bn to $3.3bn, an enormous difference but they all seem to agree it’s growing at around 300% a year.
The taxi-irking upstart has 2,000 employees and now operates in 277 cities in 54 countries, opening up in a new metropolis every day. Talk about turbocharged.
As well as funding its international blitzkrieg, the flood of financing is also going to be used to expand UberPool, which links drivers with empty seats with passengers that would otherwise take public transports, according to the FT.
Uber’s expansion has been far from smooth of late, though. An executive was caught out suggesting digging up dirt on critical journalists, while it was banned in Delhi late last year when a driver allegedly raped a passenger. Meanwhile, regulators from Madrid to Mumbai have been doing their darndest to get the service banned, egged on by coddled taxi drivers.
There’s clearly so much money to be made in disrupting the taxi market that Uber isn’t going to full-on crash any time soon. But as regulators catch up with the startup, the costs of expansion will have started to escalate. And if public opinion in enough cities were to snowball against Uber, then it could find it difficult to deliver the returns its legions of investors are so obviously expecting.
There is, though, clearly an IPO in the offing, quite possibly this year. The six-year $1.6bn bond will convert into shares at a 20-30% discount to any listing price, according to Bloomberg, and its coupon will increase if it hasn’t gone public within four years. The potential danger for Uber is that once it goes public all the hot air could come floating out as its investors fill their boots faster than you can say, 'Taxi!'