Already one of the most highly valued private companies in the U.S., Uber just received a new $1.6 billion round of financing that will add to its arsenal and help fuel its expansion.
The ride-hailing company closed on $1.6 billion in convertible debt from Goldman Sachs Group Inc.'s (GS) wealthy clients, and is also in discussions to raise another $600 million from investors, reports The Wall Street Journal. Uber declined to comment.
Uber's valuation had already hit $41.2 billion after an earlier $1.2 billion round of financing from big investors. Altogether, the start-up has raised more than $4 billion in equity and debt funding. To understand why investors are so eager to put their money into the sometimes controversial ride-sharing company, one only has to take a quick glance at the venture's fast-paced expansion. In a paper issued on Thursday by Uber with Princeton economist Alan Krueger, the company revealed that it rose from a base of almost no drivers in mid-2012 to more than 160,000 at the end of 2014.
On top of that, its drivers are making significantly more than the average taxi driver, the paper found.
Uber drivers earn an average of $19.04 an hour, or about 48 percent higher than the $12.90 per hour earned by taxi drivers and chauffeurs, as tracked by the Occupational Employment Statistics survey.
While higher pay may be one reason why drivers are signing up with Uber, the report also noted that many cite the service's flexibility, which allows drivers to set their own hours. That could appeal to workers who are under time demands, such as students or parents, as well as those who already have a job, whether part-time or full-time.
Uber is "an attractive option to those who want to work part-time or intermittently, as other part-time or intermittent jobs in the labor market typically entail a wage penalty," the study noted.
As for the funding, Uber sold the convertible debt to members of Goldman's wealth-management division, who typically have more than $10 million in net worth. The debt is a six-year bond that will convert to stock at as much as a 30 percent discount to Uber's valuation when it goes public, The Journal reports.
Uber is continuing its expansion, with chief executive Travis Kalanick writing in a December blog post that the company would create more than 1 million jobs in 2015 and focus on expanding in the Asia-Pacific region.
Its fast growth hasn't come without growing pains, however. It's come under fire for using its "God View" tracking ability to keep tabs on reporters' whereabouts, while several high-profile sexual assault cases have raised questions about whether it can be trusted. Several countries and municipalities have also challenged the service's legality, with South Korea indicting Kalanick with running an illegal taxi service.
Despite the road bumps, Uber is far from running out of gas, thanks to its latest round of financing.