Uber, formerly known as Uber Cab, a San Francisco based company backed by StumbleUpon co-founder Garrett Camp and Red Swoosh founder Travis Kalanick is close to raising a substantial new funding in a round led by Benchmark Capital.
At least two sources have said that Uber, has managed to get over $10 million in new cash at a valuation of $60 million, with Benchmark said to be the leading the new round of investment. Kalanick had not responded to my request for comment. Late last year, Uber raised $1.25 million in seed funding from First Round Capital , Lowercase Capital and angel investors. The company provides a service that connects consumers with private car services via a mobile application. The service is meant to use the smartphones to organize what is essentially an unorganized sector.
While it has advantages – no need to call and order a taxi and automatic billing – the service is a long way from being mainstream. It is not cheap, which limits its appeal to a certain segment of the population. The ride costs you starting at a base price of $8 plus $4.90 per mile and $1.25 per idle minute. It is still a niche product – hit with the San Francisco techies, and it needs to prove its mettle in bigger, more brutally competitive markets.
Uber recently launched in New York, where it will be competing with a massive taxi population, a situation very different from San Francisco, where getting cabs can be tough. It will be a true test of its business model. The good news for the company, at least in San Francisco, many limo-drivers, especially those who own two-to-three cars like the service, because it wallows them to maximize utilization of their service
“In Manhattan there are many transportation options and even a small slice there will be bigger than San Francisco,” said Kalanick, who recently took over as the CEO, in a chat a few weeks ago. He said that the company was going to go on an expansion drive and would be opening up operations in major cities across the US. That would perhaps explain that need for new cash.
Kalanick said while most people see the startup as a service provider, not many think about his company building what he describes as a “predictive real-time supply chain management solution” and it is not as easy as it sounds. Today, on the app, you can see town cars nearest to you, follow their progress and order them from your location. The data is sent to passenger and drivers in near real time, and the system keeps track of the journey and billing.