According to a Wall Street Journal report this week, Uber Inc is in talks with a group of fund managers to begin a new round of fundraising that would value the five-year-old ride-sharing startup at more than $12 billion.
The fast-growing on-demand taxi-booking service, whose smartphone app can easily connect passengers with private drivers, is talking to several firms including BlackRock Inc. (BLK) and private equity firms General Atlantic and Technology Crossover Ventures to “raise near or above $500 million in funding”, the publication said, citing people familiar with the matter.
The double digit valuation would be a significant increase from where Uber was previously valued. Last summer, the company completed a $258 million round of fundraising with Benchmark Capital, Goldman Sachs (GS), Amazon.com (AMZN) and Google (GOOGL) Ventures serving as the largest investors, giving the company a valuation of $3.5 billion. Throughout its first five years, Uber has raised more than $307 million.
People who have looked at Uber’s funding rounds are optimistic that the company that operates in 115 cities across the world and has more than 900 employees, could rake in as much as $1.5 billion in net revenue next year.
Uber makes its money by offering fares that are 30 percent cheaper than a traditional taxi and taking a 20% commission fee from its drivers. According to the numbers leaked to Gawker in December 2013, Uber was making an average of $20.5 million in revenue per week at the time. Annualized, that’s $1.068 billion for FY2013.
The ascent of Uber, which was founded in 2009 following an incident where founders Travis Kalanick and Garrett Camp couldn’t hail a cab during a stay in Paris, has been meteoric. The company is one of the most valuable venture-backed startups in the world. But a valuation of more than $12 billion would certainly put it in an elite club.