Uber — the app-based, on-demand transportation service — has been on has been on a fundraising tear as it expands globally in the face of major competition. China is the company’s latest battleground. Today, Uber confirmed that it has raised a further $1.2 billion in funding, led by search giant Baidu, in order to continue expanding Uber China, and the round is not yet closed.
The news appears to have been timed to coincide with another big piece of funding in the Chinese transportation wars: Uber’s biggest competitor in the country, Didi Kuaidi, also confirmed today that it has raised an extra $3 billion for its own coffers.
Uber’s news was first revealed in Chinese-language site Sina by Uber CEO Travis Kalanick, and Uber has confirmed the figures to us directly. Bloomberg first reported rumors of Didi’s funding, and on the heels of that we have directly confirmed the $3 billion number and $16.5 billion post-money valuation with sources close to the company.
We have not been able to get any investor names confirmed yet for Didi Kuaidi’s latest round. Previous investors who have put over $3 billion in the company to date reportedly include Alibaba, Softbank, Tencent, China Investment Corp and Beijing Automotive and some of these are believed to be in this latest round, too.
Uber is expected to make an official announcement also later today.
As background, Baidu was already an investor in Uber, confirming in December 2014 that it had a strategic stake in the company. We also reported in June that Uber was raising more money in the country — albeit at the time the figure was thought to be “only” $1 billion when it was reported to have closed in August. Meanwhile, in July, Didi Kuaidi confirmed it was raising $2 billion; the $3 billion here is an expansion of that earlier round.
Baidu’s role in this latest $1.2 billion investment is in addition to its earlier stake. As with the previous funding, Baidu and Uber are not disclosing the exact amount. We are also still trying to get the names of other investors in this latest round, which brings the total valuation of Uber China to over $8 billion. It’s not clear what size the round will be when closed: further investment and investors are still “in progress,” we’ve been told.
What’s also interesting about this funding is that it’s an expansion of a very regional model for Uber, which is developing Uber China as its own standalone entity, giving investors a way of putting money into the company’s expansion in one specific area.
In the case of China, Uber is working very closely with Baidu to develop the company’s local presence, local staffing and integration with local maps and other services. Uber, according to CrunchBase, has officially raised $7 billion to date (although with today’s news that is getting boosted to $8.2 billion). In the past, Uber had said it would invest $1 billion into China, and it looks like that would come directly from Uber’s coffers rather than extra, external investment.
The focus on investing in China is in line with the rapid growth Uber has seen there, doubling business volume the last month, and seeing 100 million app accesses each day, according to the Sina interview.
However, while Uber is a very dominant force in its home market of the US, as well as in other markets where it has made aggressive moves to establish itself in the face of incumbent taxi services, in China the story is different. This summer, we reported that Didi Kuaidi was carrying about three times as many passengers as Uber in China: hence the very strong push that the latter is making to change that ratio in its favor.
There have also been some fairly ruthless tactics carried out to keep Uber in check, it seems. Earlier this summer Uber had its account and profile blocked by the very popular WeChat messaging service. WeChat claimed that it was for an unspecified rule violation. Uber believes it was a more obvious competitive move — given that WeChat is owned owned by Tencent, an investor in Didi Kuaidi — to block people communicating with Uber on the network, and therefore curb some of its growth.