Uber, Google confirm $258 million mega-investment

The tech industry was abuzz Friday with news that Uber, the limousine marketplace that's branched into taxis and ride-sharing, had landed $258 million in a massive funding round from Google (GOOG) Ventures.

"Our vision is to build a technology company that changes transportation," Uber CEO Travis Kalanick wrote in a blog post, "and this financing gives us the fuel to make that a reality."
Google Ventures declined to comment beyond confirming the dollar figure -- the largest in its four-year-history. The search giant's venture arm typically invests a total of $300 million a year.
"That's a big check," deadpanned Dana Stalder, a venture capitalist with Matrix Partners in Palo Alto.
According to a Delaware regulatory filing unearthed Thursday by website All Things D, other investors are snapping up another $105 million in Uber's shares as part of the transaction. Two sources told this newspaper those shares are coming from prior investors, not the company.
Stalder said Uber and another hot valley startup, Airbnb, are changing marketplaces in ways not seen since the rise of eBay (EBAY). "Fundamentally, they're doing the same thing that eBay did: making large, inefficient markets efficient," said Stalder, who was an early employee of the auction giant before becoming a tech investor.
Uber, founded in 2009 to let people book discounted towncar rides via a smartphone app, has branched out more recently to include taxi cabs and even allow drivers of personal cars to pick up pedestrians. Uber takes a cut of each fare, and All Things D reported that the company is on track to rake in $125 million in revenue. It operates in dozens of cities around the world.
Rumors of a big funding round between Uber and Google had been percolating for at least a month. Then, the filing unearthed by All Things D showed that Uber had sold $90 million worth of stock to Texas private equity firm TPG at a valuation of $3.5 billion.
That document also said Menlo Park venture capital firm Benchmark Capital, a prior Uber investor, had bought another $15 million worth of the company's shares; Benchmark officials did not reply to requests for comment by this newspaper.
It was unclear Friday which previous investors had sold those shares. An official at Menlo Ventures, which led a $37 million funding round in Uber in late 2011, said his firm was not liquidating any of its stake. Other investors in the company include Amazon CEO Jeff Bezos, Goldman Sachs and a bevy of high-profile angels.
Google chief legal officer David Drummond, who heads the search giant's corporate development activities, will join Uber's board as part of the deal, Kalanick wrote.
Aside from the sheer size of Google's check, there are other noteworthy aspects to the investment. Google Ventures already has invested in ride-sharing startup SideCar, and VC firms typically dislike having competing firms in their portfolios.
Andre Haddad, CEO of a similar Google-backed startup called RelayRides, said Uber's funding round illustrates the sweeping changes technology is wreaking on the transportation industry. Unlike Uber and SideCar, his company allows users to rent out their personal cars to others, but it doesn't let car owners drive people around.
There's not necessarily a clear connection between Uber's business and Google's. Then again, one could say that about most Google Ventures investments, which have ranged from gourmet coffee purveyor BlueBottle to a maker of plant-based fuels.
Some valley observers wondered how the investment jibes with Google's effort to develop self-driving cars. But James Mawson, editor of Global Corporate Venturing in London, speculated that the partnership would provide Google with data insights for that effort -- and perhaps let Uber one day offer rides from robotic taxis.
Indeed, the Kalanick blog said he was attracted to Google because of its "incredibly complementary product suite, ranging from Google Maps to Android to self-driving vehicles."
Kalanick also noted Google's experience working with governments around the world. Uber and other ride-sharing companies have a history of clashes with regulators; in January, the California Public Utilities Commission struck deals with Uber and Lyft letting them provide rides by people not licensed to drive a taxi or limo.
Kalanick wrote that Uber plans to use the funding to expand into new markets "and fight off protectionist, anti-competitive efforts."