At $18.2 Billion, Uber is the World’s Most Valuable Startup Company

startup-companyInvestors were stunned when they learned last week that Uber, a five-year-old startup company, now boasts a valuation of $18.2 billion.
In a recent round of financing Uber raised $1.2 billion, valuing the company at $18.2 billion. At that valuation, Uber is the world’s most valuable startup.
To put that in perspective, Uber is now more valuable than car rental giants Hertz (NYSE: HTZ) and Avis (Nasdaq: CAR) combined.
Take a look at the chart below comparing Uber to its VC-backed startup peers.
Source: Statista
Uber, like AirbNb and other similar startups, takes advantage of something called “unused capacity.” For Uber, that unused capacity is a car sitting empty and parked for most of the day. By creating a “sharing economy,” Uber maximizes unused capacity.
The company’s whole business model is to match this unused capacity and drivers wanting to make some extra money with the riders willing to pay for the ride-sharing service.
The company enjoys a healthy commission for bringing the two together.
Considering that in 2011 the number of cars in the world exceeded 1 billion, there is plenty of unused capacity for Uber to put to use.
So far the startup company has no plans to go public and it seems to be having no trouble whatsoever raising money as a private company.
Critics cite safety concerns, tax avoidance and a lack of regulation in their opposition to Uber.
Drivers must register their vehicle with photos of the interior, exterior and valid registration. After uploading photos of their license, Uber conducts a background check and DMV record check on all of its drivers.
Considering Uber knows way more about its drivers than you know about the person driving your cab, I consider Uber to be far safer than taking a cab.
Uber is simple to use for both rider and driver.
Users download the app and link a credit card and phone number to their Uber account. When they need a ride, they open the app and request one. The phone’s GPS sends the user’s location to Uber’s dispatch software and the closest available Uber driver is automatically assigned to pick up that user.
There is no dispatcher, no standing on the side of street trying to hail a cab, and no question about whether or not someone is actually on their way. Users can track the progress of their driver through the app and the two parties can call each other through anonymized phone numbers.
At the end of the ride, the user simply gets out of the car and walks away. Payment takes place electronically through the app. Uber bills the credit card on the user’s account and pays its drivers weekly.
I occasionally drive for UberX in the Denver area and can vouch for how simple it is to drive for Uber. The money isn’t incredible – $10 to $30 per hour depending on how busy it is and whether you decide to calculate the wear & tear on your car – but is certainly enough to get people on the road who might otherwise not be working.
Uber’s growth is staggering. It only took Uber a little more than five years to rise from its birth to a valuation of $18.2 billion dollars. The company now operates in 130 cities in 38 countries, and is expanding fast.
Though the company faces major obstacles with taxes, safety and a powerful limousine & taxi industry, heavy-hitting investors are lining up for a reason.
Uber is the world’s most valuable startup because of its brilliantly simple concept, rapid growth and an exceptional user experience that is taking the world by storm.

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