May 16 (Bloomberg) -- Uber Technologies Inc. is seeking to join the $10 billion-plus club.
The San Francisco-based startup, which makes a mobile application for car-service booking, is in talks to raise new financing in a round that may value it at more than $10 billion, according to people with knowledge of the situation. That would almost triple the company’s value from $3.5 billion last year when it garnered $258 million.
Uber is discussing raising less than $1 billion with new private equity investors, said one of the people, who asked not to be identified because the information isn’t public. The size and value of the funding may change, the person said.
An Uber representative declined to comment yesterday.
If Uber completes a round at more than $10 billion, it would join an exclusive group of closely held companies with 11-digit valuations. Room-sharing service Airbnb Inc. and online storage service Dropbox Inc. were valued at $10 billion in recent fundraisings, while Palantir Technologies Inc. sought at least a $9 billion value last year. By contrast, the median market capitalization for technology companies in the Standard & Poor’s 500 Index is about $16 billion, according to data compiled by Bloomberg.
At more than $10 billion, Uber would exceed the valuations of technology companies including Red Hat Inc. and Akamai Technologies Inc., as well as retailers Best Buy Co. and Staples Inc.
The fervor around startup financing has renewed debate about whether Silicon Valley is in a new bubble. While there are fewer technology IPOs today compared with the late 1990s dot-com boom, venture funding hit $10 billion in the first quarter, the most since the second quarter of 2001, according to researcher CB Insights. Startup financing rounds in the first quarter also reached their highest median valuation increase since 2004, according to a survey by law firm Fenwick & West.
Uber is raising new financing to boost growth and its operations, said the people with knowledge of the matter. The company recently hired Cameron Poetzscher from Goldman Sachs Group Inc. to head its corporate development. Poetzscher joined Uber in March and formerly was a managing director at the Wall Street firm's mergers and acquisition practice in San Francisco, according to his LinkedIn Corp. profile.
Uber was founded by Travis Kalanick and Garrett Camp in 2009 after they couldn’t find a cab during a trip to Paris. The company has since raised $307.5 million from investors including Benchmark, TPG Capital and Google Ventures. The company, which rolled out its service to 115 cities globally, has 900 employees. It takes a 20 percent commission from its drivers.
“Our vision is to build a technology company that changes transportation and logistics in urban centers around the world, and this financing gives us the fuel to make that a reality,” Kalanick, Uber’s chief executive officer, has said in a blog post.
Uber has a high-end service for limousines and luxury cars, as well as lower-priced options. The company recently started a courier service in Manhattan that may be expanded elsewhere.
Uber and its competitors have faced numerous challenges since its founding. Rival Lyft Inc. raised $250 million in April and expanded its car-sharing locations by two-thirds to 60 U.S. cities. Lyft’s cash hoard has enabled it to drop prices for rides, spurring a price war with Uber.
Uber is also facing regulatory hurdles around safety concerns and protests by taxi drivers’ lobbies in the U.S. and internationally. London’s taxis are planning a 10,000 cab protest next month, following similar protests elsewhere in Europe.
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