Uber Technologies Inc. investors are betting the five-year-old car-booking app is more valuable than Twitter Inc. and Hertz Global Holdings Inc.
The startup is close to raising a round of financing that would value it between $35 billion and $40 billion, according to people familiar with the situation, who asked not to be identified because the details are private. T. Rowe Price Group Inc. is in discussions to be a new investor and existing investor Fidelity Investments is also set to participate in the funding, the people said.
“At this valuation, investors appear to be thinking that when Uber goes public, it might be worth $80 billion to $100 billion,” said Anand Sanwal, chief executive officer of CB Insights, a research firm in New York. “This type of mega-financing affords Uber a great deal of flexibility in terms of when they might go public.”
If Uber completes the funding, the valuation of as much as $40 billion would more than double its $17 billion value from a June financing round. That would also put Uber at about 1.5 times the capitalization of microblogging service Twitter (TWTR) and at the same size as Salesforce.com Inc., Delta Airlines Inc. and Kraft Foods Group Inc. It would dwarf car-rental company Hertz, which has a market capitalization of $11 billion.
The funding talks show that investors’ appetite for growth wasn’t affected by the fallout from remarks made last week by senior vice president Emil Michael about prying into journalists’ private lives.
“Uber has done a lot of ill-considered things, but I still wish I were its investor,” said David Cowan, a partner at Bessemer Venture Partners.
Uber is seeking to raise at least $1 billion, the people said. The financing hasn’t closed and the terms and investor group may still change, one of the people said. T. Rowe previously considered investing in Uber and may still end up passing this time, two of the people said. Representatives for Uber, T. Rowe and Fidelity declined to comment yesterday.
Already in June, Uber’s valuation was a record for a U.S. technology startup in a direct investment round. That put it at the front of a pack of elite U.S. technology startups that are valued in the eleven-digit range, including Airbnb Inc. and Dropbox Inc.
Such valuations are spreading internationally. In China, smartphone maker Xiaomi Corp. is in talks for a funding round that would value it at $40 billion to $50 billion, people familiar with the matter have said.
Uber is raising more money to finance its international expansion, people close to the situation said earlier this month. The company, founded in 2009 by Garrett Camp and Chief Executive Officer Travis Kalanick, has rolled out its car-booking services to more than 220 cities worldwide.
Uber has run into controversies during its fast expansion, including roiling established taxi and limousine industries and facing regulatory hurdles. Some drivers for the service have also complained about the company’s commission structure.