Financing Ventured

Facing overwhelming demand from institutional investors, Uber has expanded its Series E round of venture financing by $1 billion, according to documents filed Wednesday with the Delaware secretary of state, bringing the total capacity for the round up to $2.8 billion. The move, which was confirmed by Uber, occurred just weeks after the company closed a $1.2 billion round of financing. … The most recent expansion is on top of some $4 billion Uber raised, including a recent $1.6 billion round of convertible debt financing from the clients of the private wealth arm of Goldman Sachs, the investment bank previously confirmed.

Why, you might ask (or not, but whatever), would Uber need all that money — so much that it did not even expect to field that amount? A remarkably concise explanation from CEO Travis Kalanick:

@JeremyShure @ajs @MikeIsaac — Uber’s success is dependent on making transportation as a service sustainably lower cost than owning a car

— travis kalanick (@travisk) February 7, 2015

@JeremyShure @ajs @danprimack @MikeIsaac @Uber if we don’t lower prices sustainably below car ownership, market oppty significantly limited

— travis kalanick (@travisk) February 7, 2015

Building this kind of world-transforming infrastructure is indeed expensive, especially at a truly global scale. But how could it be possibly be sustainable for users to constantly pay another human to drive them around at a price that is still cheaper than owning a car, particularly in cities and suburbs that aren’t exactly dense?

@danprimack fair enough… driverless in 2030 FTW… 🙂 /@MikeIsaac

— travis kalanick (@travisk) February 7, 2015

Oh, right.