2 Comments

Summary:

With a funding round of at least $258 million, Uber joins an elite group of tech companies that have landed blockbuster investments. The problem is that most of those storied companies have a history of failing.

Exactly how much money Uber raised in its blockbuster funding round from is still a bit fuzzy — with reports ranging from $258 million to $361 million — but whatever the exact total there’s no question that Google and TPG just shoveled massive big bucks into the ride-hailing collaborative consumption darling. Regardless of which figure you use, though, the cash infusion is far from the biggest funding round in the tech industry, according to Rutberg & Company.

Rutberg has compiled a chart of VC investments, using the $258 million figure, and found that Uber’s round came in at number 11. Even if you assume the $361 million number, Uber would only come in fifth, but that doesn’t take into account that several of the companies on the list had multiple $200 million-plus rounds.

Top 15 VC Financings in Mobile (2001-2013), source: Rutberg & Company
Company Sector Date Amount ($MM)
Clearwire Carrier 7/5/2006 900
LightSquared Carrier 10/4/2010 850
MetroPCS Carrier 10/5/2005 600
Helio Carrier 1/26/2005 440
Clearwire Carrier 3/11/2006 360
Genband Infrastructure 1/7/2013 343
Quippo-WTTIL Infrastructure 8/11/2010 304
TerreStar Carrier 2/7/2008 300
Helio Carrier 9/21/2007 270
Lightsquared Carrier 7/5/2011 265
Uber Application 8/23/2013 258
O3b Networks Carrier 11/29/2010 230
Xiaomi Device 6/28/2012 216
Mobilicity Carrier 4/13/2011 214
ProtoStar Carrier 11/15/2006 210

Almost every company ahead of Uber on the list is or was a mobile carrier, which makes sense, given the massive investments that carriers must make in network infrastructure. Helio was a bit of an exception, since it was a mobile virtual network operator (MVNO) that used Sprint’s networks, but that just goes show how spectacularly the company failed. After more than $700 million in investments from SK Telecom and Earthlink, Helio basically fizzled, selling its meager 170,000 customers to Virgin Mobile for $38 million.

In fact, much of this list looks like a rogues gallery of companies that had big plans to change the mobile industry but utterly failed. The biggest investment windfall went to Clearwire, which was supposed to transform the way we used mobile broadband, turning it into a cheap, nearly unlimited commodity. It, too, got a big cash infusion from Google as well as Intel and the cable operators. After failing to complete its network and several years of financial turmoil, Sprint this summer acquired the half of Clearwire it didn’t already own.

In fact, most of the companies at the top of this list either no longer exist as separate entities or are breathing their last breaths. LightSquared has gone bankrupt, though the company’s primary backer Philip Falcone is struggling to keep it alive. Satellite broadband provider Terrestar also went bankrupt, selling  its spectrum to Dish Network. Of the carriers, MetroPCS  made out best, merging with T-Mobile earlier this year.

Though Uber is in an entirely different business than those carriers, its new membership in the blockbuster-funding club has got to give it a case of the willies. Raising enormous sums of capital doesn’t guarantee success. It actually seems to be a good predictor of failure.

You’re subscribed! If you like, you can update your settings

  1. Charles Rathbone Tuesday, August 27, 2013

    Hundreds of millions of dollars? For crying out loud, it’s a glorified cab company.

Comments have been disabled for this post