The disruption game is on. Swvl has raised more money and it is currently staging a major feat in Kenya. Swvl riders in Kenya will now save their MBs while onboard Swvl buses, as well as have access to online entertainment, similar to the experience you have onboard a plane with mini TVs sticking into your faces.
Here Is All You Need To Know
This innovation is by way of a partnership with BRCK, a Nairobi-based startup.
The partnership will see BRCK installing free WiFi and online entertainment on its buses in Kenya.
The Kenyan BRCK startup has developed a rugged, self-powered mobile WiFi device for internet connectivity in areas with poor infrastructure.
These WiFi routers are being installed by BRCK in Swvl buses to have riders access the internet using Moja, a free WiFi network BRCK that also comes with entertainment content including Music, TV shows, cartoons, and books.
The users can access free content by downloading Moja’s Android app.
BRCK has already installed its routers on 15 Swvl buses and is expected to take this number to 700 by 2020.
Swvl is paying a monthly fee to BRCK for installation and maintenance of the routers.
Top 10 Startup Funding Africa, 2019
Extension To Other Markets Outside Kenya
Swvl and BRCK have not confirmed if they plan to extend their partnership to other markets where Swvl operates.
BRCK’s network is already available on a large number of minibuses (Matau) in Kenya and Rwanda with over 445,000 unique monthly active users, TechCrunch reported citing company data.
Swvl, since launch in 2017 in Cairo, has expanded to Alexandria, Nairobi, and Lahore, with tens of thousands of daily bookings in these markets. The startup had recently raised $42 million in one of the largest tech investment rounds of MENA. Careem had also announced last month that it will be providing free WiFi to all the riders in UAE.
This is a classic way startups can effectively leech on to the existing value chain.
Swvl’s Business Model
SWVL’s goal is to make it easier for Egypt’s residents to book bus rides at a fixed rate on existing routes.
Users schedule trips, pay online or in cash and are given virtual boarding passes.
Even with fierce competition from the likes of Buseet and Uber vying into premium public transport service, SWVL’s application has been downloaded for well over 360,000 times on Google play store and Apple iStore.
The platform completes 100,000 rides monthly.
It was the first company to introduce the service in Egypt in 2017 before Careem and Uber joined the sector late last year.
Swvl is however different from its competitors because of its series of partnership deals. The startup’s credit facility agreements with Nasser Social Bank and EFG Hermes Bank, and after-sales support and maintenance services with Ford-trained technicians are some of these moves.
What Egyptian SWVL users think about the startup is its priority on affordability, comfort, and safety.
Not Afraid Of Competition
Although Swvl is the first riding app to offer bus services in Egypt, giant transportation startups Careem and Uber have recently offered their own bus services.
Mostafa Kandil, Egyptian CEO and founder of Swvl, has however noted that the joining of Uber and Careem to the industry has not influenced Swvl’s growth asserting that they have witnessed remarkable development since the two competitive players have launched. In 2018, the startup was valued at nearly US$100 million, becoming the second Egyptian company after Fawryto reaches these figures.
The startup has recently signed an agreement with Ford motor company to deploy more cars on the road. Ford Transit, which the startup intends to use is already the third best selling van of all times. SWVL is already in possession of about 100 Ford Transits. Hazem Taher, SWVL’s Head Marketing Manager, said the vans were ready to go and they’re excited to push them on SWVL’s route.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
No option but to give the glory to them. 700 drivers. R2.3 in personal funding, former South African prison warden and former South African former security guard warden have teamed up to launch Taxi Live Africa — South Africa’s latest in a long string of e-hailing apps — and claim to have invested R2.3-million of their own money in the startup so far. The Durban and Cape Town-based company is South Africa’s latest in a number of the ride-hailing company, following the launch earlier this year of “Sushi King” Kenny Kunene’s Yookoo Ride and Ridver, launched by Opynio Media and Technology, a black woman-owned company (see this story and this one).
Here Are The Details
Former prison warden Luvuyo Ntshayi and Soyiso Qotyiwe, a former security guard turned taxi driver, last month launched the app to residents in Durban.
Ntshayi said the company — which he says he’s spent two years researching and developing — has signed up over 700 drivers in Durban and more than 100 in Cape Town, where the company aims to expand to next (see also this story by our sister site Memeburn).
Luvuyo Ntshayi, former prison warden and Soyiso Qotyiwe, a former security guard, claim they have invested R2.3m in Taxi Live Africa
The ride-hailing startup has initially focused on meter taxi drivers — to help them to compete against e-hailing sector, which was why the company kicked off operations in Durban, where Ntshayi says he received strong demand from local meter taxi drivers for the offering.
But he says this doesn’t mean the app is only for meter taxi drivers. Private drivers from the e-hailing sector are also welcome to use the app.
The company charges drivers a commission of 13%, a rate which Ntshayi says is both fair to drivers and sustainable for his business.
Ntshayi estimates that he and Qotyiwe have together invested R2.3-million in developing the company and the app. He says the amount includes the cost of traveling to Asia where he claims he visited several companies to research the idea of an e-hailing app further. He declined to name the countries and companies he visited.
The company, he says, presently has 14 employees — eight in a Durban office and six in Cape Town. It also has an outside developer team of four.
Ntshayi says in 2008 he joined the correctional services department as a prison warden. In 2012 he completed an HR Diploma before a year’s stint in 2014 as an HR officer at South Africa ‘s Department of Rural Development and Land Reform.
He left his life as a public servant after he secured a R50 000 grant in 2015 from the National Youth Development Agency (NYDA) to set up a detergent manufacturing business in Blue Downs, Cape Town.
However, he says despite help from a mentor, the business never got off the ground. He puts this down to his lack of experience in manufacturing.
Ntshayi — who says he’s had calls from those in neighbouring countries to offer his app’s service there — says however that he’s not focusing on competing with the likes of Uber and Bolt which together dominate the ride-hailing sector.
But he points out that his business’s focus on customer care, including the use of a call centre and a live online chat facility, will help it to gain acceptance in the market.
“We’re not really wanting to be better than anyone from the word goes — we just want to learn,” Ntshayi says.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
When Iddris Sandu was in high school, he developed mobile software that would later gain the attention of former U.S. president Barack Obama and land him at the White House, where he received the honorary presidential scholar award. He was only 16 years old. Now 21, the Los Angeles-based young man is the unconventional tech guru who has accomplished many incredible feats, including being responsible for algorithms that have made Uber, Instagram, and Snapchat what they are today.
The software engineer considers himself a “cultural architect” and said he aims to “level the playing field” between Silicon Valley and young communities of colour. Born and raised in Harbor City, California with parents from Ghana, Sandu would never forget a harrowing experience he had when he was eight – his father had wanted to take him on a trip to Ghana.
“But on the fourth day of the trip, he abandoned me in this village, took my passport and came back to the States,” Sandu told Oxford University’s Music and Style Magzine, adding that he was abandoned for almost nine months before getting into contact with an NGO which helped him travel back home.
He got back to the U.S. when the first-ever iPhone was unveiled, and this started his journey into the tech world. “I just got super inspired. I thought – this device is going to change the world.
The reason why the iPhone was so important was that it was the first time when regular consumers could develop for other regular consumers. Before, you really had to work at a tech company for multiple years to be able to offer any sort of input or to create an app. But Apple made it so mainstream. I knew it was the future,” he said.
Just 10 years old then, Sandu started learning to programme on his own for the next two years at a public library and this was where he got spotted by a designer from Google, who offered him an internship opportunity at the company’s headquarters. At age 13, he got his first experience with programming and worked on many projects such as the initial Google blogger, Google Plus, among others.
Yet, Sandu was determined to affect change; hence, at the age of 15, he designed an app for his high school that gave students turn by turn directions to navigate their classrooms. Being the only school in California that had an app made by a student, Sandu received wide acclaim that would later afford him a meeting with former President Obama.
During that same period, Sandu wrote an algorithm that he would go on to sell to Instagram and by the age of 18, he was already consulting for Snapchat before landing at Uber, where he created a software (Autonomous Collision Detection Interface) for its self-driving cars. With the passion to bridge the gap between the informed and uninformed, and to inculcate into young people like him the need for invention and creativity, he left major tech companies to bring that change.
“Information is one of the highest forms of class. And that is what keeps people divided. You should be able to think on a higher level, instead of being strictly consumers. And people of colour, in particular, are more likely to be consumers than creators. It’s really hard to get out of poverty or to change the structure of economic power if you’re always going to be a consumer rather than creating. Shifting that narrative is what I’ve been trying to do. And thus far, it’s worked, it’s successful.”
From encouraging the study of STEM subjects in schools and at higher levels, Sandu, in 2017, met rapper Nipsey Hussle at local Starbucks, and in three weeks, they had transformed an abandoned storefront in Los Angeles into the Marathon Clothing Store. The smart store offers exclusive music and other content to customers who have downloaded an app said The New York Times.
The store leveraged Iddris’ tech and design background and Nipsey’s cultural influences, sparking the interests of many journalists as well as hip hop and cultural icons like Russell Westbrook, Vegas Jones of Roc Nation, among others.
In an interview with the CNBC, Sandu said the store has helped him bridge the gap between culture and technology, and would love others to do same.“We are living in the digital revolution,” he said. Although “we are all constantly exposing ourselves to content in real-time.”
The tech wizard has since partnered with Kanye West and Jaden Smith on some future businesses, clothing lines and disaster relief projects that are set to launch in 2019, according to CNBC. Having created his own music, putting together the sonics and instrumentals in just 3 days to form a full album, the creative technologist is working on a book about recent initiators, including Kanye West; Robi Reed, a casting director; and Edward Enninful, the editor of British Vogue.
With the drive to use all his networks to empower young people in America to make a positive impact in their communities, the unconventional tech genius is already on his way to become a leader for the next generation of influencers and entrepreneurs.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Glovo now exists in Kenya, Morocco and Cote d’Ivoire, with plans to expand to Ghana, Nigeria, and Tanzania. The startup which was co-founded by the 26-year-old Barcelona -based Oscar Pierre in 2015 has raised over $340 million since it was founded and is already displacing major players in the crowded delivery industry.
Here Are Quick Facts About Glovo:
Barcelona-based Glovo is the on-demand delivery app that allows customers to order anything — restaurant meals, groceries, flowers — from more than 1,000 participating businesses and have it delivered in less than one hour.
Simply put, the startup is known as the “anything” delivery app.
Glovo makes profit by charging a service fee, plus a commission on their partners, depending on the cost of the product or item.
The most interesting fact about Glovo may be that despite being founded only about 4 years ago in 2015, the company already has a presence in 178 cities across 23 countries.
The startup’s vision is to be a lifestyle app with all urban services available easily through its smartphone application.
Food delivery service remains its most popular service. Other services available on the app include Groceries, Pharmacy, Desserts, Courier, and Quiero (anything).
While most companies are very focused on food only, Glovo can, however, deliver everything.
The food business allows users to find and place orders with their favorite restaurants which is picked up when ready and delivered to the user’s doorstep. Today, more than 85% of Glovo’s orders in Europe are for food.
Unlike the other couriers — namely the UK-based Deliveroo and US-based UberEats — Glovo couriers don’t just pick up food for customers of the app. They’ll also buy them a particular dress in a size 12 from Zara, or grab some painkillers from a pharmacy if the customers so request.
While this model continues to be its flagship service, the company is reportedly experimenting with CloudKitchens and Grocery Darkstores.
In fact, the startup has become so successful that Bloomberg said Glovo could now be worth €650 million ($730 million)
The firm’s revenue jumped from €18 million ($20 million) in 2017 to €81 million ($91 million) last year.
Over 200 key players are defining the Barcelona startup tech ecosystem
‘‘We…Found Our Gap’’
Glovo is not the first delivery app out there. Oscar knew this. In fact, at the time of starting up Glovo, there was already the US firm Postmates (which inspired him) that delivers anything a city-dweller might need or want, as well as Uber and Amazon’s Deliveroo that do similar things. This means the startup is already in direct competition with those companies. Thus, it is rather surprising that Glovo would make such quick success.
‘‘It makes the market more difficult,’’ Oscar told Spanish online magazine Viaempressa. ‘‘We have found our gap; we are the only platform in Europe that supplies the user with anything in the city, and I think that this is the key; the offer is broad. It doesn’t scare us that the competitors are large, being small is a competitive advantage because it means we can react quickly to these monsters. They are very powerful, but they move slowly. A clear example is our partnership with McDonald’s, for which we competed against Uber Eats and Deliveroo. We got it because we were the quickest to come up with a model that McDonald’s needed, it is specific for them on a technological and logistical level. When you are a startup, you bargain more easily.’’
Pierre also said there are many differences between Glovo and other national or international startups.
‘‘Our freelancers will buy for you whatever you want,’’ he said . ‘‘Another major difference is that our service is based on immediacy. We have a totally different model compared to other apps dedicated exclusively to transport people or deliver food. In addition, we are not a logistics company, nor do we want to be. These companies are only dedicated to collect and deliver while we put a whole city open to anyone.’’
Getting The Timing Right is Crucial
Getting into a crowded market could be easy but staying successful would remain the toughest game startups will face. Oscar Pierre, however, said getting the timing right is crucial. Glovo doesn’t come on board a country where there are already two dominant players (which is the case in Mexico, Colombia, and the UK), he said.
‘If we went to the UK today it would be super tough or impossible to become one of the main food delivery companies. It’s a snowball effect; as you don’t have the volume, you don’t reach to the top chains or restaurants which doesn’t give you the growth,’ Oscar told Sifted, a new FT-backed website that launched early 2019.
Again, the startup succeeded in Spain mostly because it brought big brands such as McDonald’s and KFC onto its app and this led to ‘massive growth’. Before then, competitors like Deliveroo refused to meet the big companies’ demands. This was an opportunity Glovo held onto. ‘‘We literally built anything they wanted,’ Pierre said.
Today, Glovo is the biggest food delivery service in Spain (where it is profitable and takes around one million orders per month)
Oscar said: ‘Every single city needs between six to nine months to reach operational break-even. Structure-wise, it’s been super interesting You have to delocalize — otherwise the company stops. You need to find super strong regional teams. In Buenos Aires, Argentina, we have a very senior team, with almost a CEO and CMO, and they take all of the decisions.’’
‘‘We pitched to 118 funds, and all of them said ‘no.’ ’’
Oscar said building the startup did not come without a fight. He said the startup pitched to 118 funds before its current progress.
“For our series B round, we pitched to 118 funds, and all of them said ‘no.’ We were very close to going bankrupt, maybe a month away. All our competitors were huge. Two years ago, there was no way to convince investors that we’d really be competing face-to-face with Uber Eats or Deliveroo. There was very little conviction about food delivery back then.
Being from Barcelona was always very tough because when you only operate in Spain, you don’t have access to the VCs in London or in France. The Spanish ecosystem of VCs is very small and very risk-averse,” he said.
In 2017, Glovo raised $30 million in a series B funding round led by the Japanese tech giant Rakuten. Rakuten ended up being a company with a famous connection to Barcelona that came to Glovo’s aid.
‘‘One day, Rakuten came out of the blue and decided to invest in us,” Pierre said.
Since then, two other funding rounds have followed, the latest of which, totaling 150 million euros, or $170 million, was led by the early Spotify investor, Lakestar, in April, 2019 taking the startup’s total funding to $340 million.
Glovo renders delivery services for anything the city has to offer and is learning, growing and improving fast.
Remembering those periods in the startup’s story, Pierre said he didn’t know if he were doing a rational thing then.
‘I have to say, I don’t know if it was a very rational investment at that moment — when you have over 100 smart investors saying no, it might mean something,’ he said.
Oscar said the most important factor that has guaranteed the startup’s continuous growth is its quest to remain profitable.
‘‘Only those who focus on profitability get funding,” he said. “We make sure we are not only growing, but that the cities are not in negative numbers for many months. We know there are cities that need only six months to show losses and others, 12 months, because it all depends on size; but we know that sooner or later we will get good numbers. In Spain we have seen more than 10 proposals similar to ours and many of them have failed. The margins are small and if you do not look after them well, it will not work,’’ he said.
Focusing on profitability has helped the startup to steer clear of loss. In 2016 Pierre said the startup obtained 1.1 million net euros in profit, which represents the commissions from their partners and shops along with what the user paid for the service, and that meant tenfold growth. In 2017, barely two years and two months old, the startup took a millionth order. The number has since doubled.
‘When a sector is overfunded…investors disappear’
Pierre said the urge for startups to get funded almost always comes with a price — a sudden disappearance of investors.
‘‘Delivery is a complicated sector. Between 2010 and 2012, there was overfunding in Barcelona. It was new and grew quickly because it clearly had value. A lot of projects were funded that began to close down in 2014 and that went on for another couple of years. That was just the moment when we began looking for funding. The investors saw that the sector was in fashion, but that it had problems. And what happens when a sector is over-funded is that the investors disappear,’’ he said.
The Best Way To Confront Fund-Raising
Pierre said the best way to confront fund-raising is by being humble.
‘Our most important core value is humbleness. I tell it to the team a lot. I’ve seen companies burst because of lack of humbleness,’ he said.
‘Every time I go to the board, I’m like, “Oscar man, if you’re not taking big steps you’re not going to be the best CEO for this company.” So I just keep that in my mind all the time.’
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
The investment is from internet giant Naspers’s Foundry investment fund for South African startups. This is the first investment Naspers Foundry would be making. With a $2 million (R30 million) investment in the gig economy startup SweepSouth, Naspers’ Foundry is making a big bet.
“The investment kicks off Naspers’ commitment to supporting talented and ambitious entrepreneurs in South Africa who are using technology to improve people’s daily lives,” said Naspers chief executive Bob van Dijk.
“We are inspired by entrepreneurs like Aisha and Alen who use innovative technology to improve people’s lives. We know what it takes to scale tech businesses, and the team is looking forward to working together with SweepSouth to help them do that.”
Naspers Foundry is a $98 million (R1.4 billion) fund that was announced last year as part of the South Africa Investment Conference last October, held by South African President Cyril Ramaphosa to spur investment into the country
The Business Is To Simply ‘Clean’
Founded in 2013, the Cape Town-based startup is an online cleaning service for domestic cleaners in South Africa’s major urban centers, founded by couple Aisha Pandor and Alen Ribic, who invested their savings for their children’s university studies in the startup after they struggled to find a cleaner.
The startup is often referred to as the “Uber of cleaning.”
About SweepSouth
SweepSouth has reached $7 million (R100 million) in revenues in the past year.
“We went from the two of us working around our dining-room table — both of us sitting all day and working on this business plan — to going from a few domestic workers we were interviewing ourselves,” Pandor has said, and “even went from cleaning houses ourselves to having 11,000 domestic workers on the platform”.
Pandor said SweepSouth was “ecstatic” about the investment and aims to use it to expand into other home services and growing beyond the South African market.
“We are proud to have provided employment opportunities for thousands of people, many of whom are single mothers. To be able to bring these opportunities to a new region in South Africa is both rewarding and exciting,” said Pandor, who is the daughter of South African cabinet minister Naledi Pandor, who is minister of international relations and cooperation.
“We see ourselves as an emerging market-focused platform that aims to serve the many professionals who don’t have the time to source the services we provide, whilst also creating meaningful employment opportunities.”
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Lagos residents will now have one more online ride-sharing option to choose from by July this year. Egypt’s ride-sharing startup SWVL has announced plans to launch in Lagos, Nigeria in July. 5O buses would be on the road from the date of the launch, according to Swvl’s Country General Manager in Nigeria. This is expected to be a huge challenge to existing ride-sharing options, such as Uber, Bolt, and ride-hailing motor-bike alternatives.
SWVL expects the surging population of Nigeria’s most populous city to be on its side. The startup is already in Kenya and Egypt and has plans to expand to Uganda soon. Other target countries include Thailand and Vietnam, and possibly operations in seven world mega-cities by the end of this year.
Barely 2 years in existence, it is the most funded startup in Egypt.
Swvl’s Business Model
SWVL’s goal is to make it easier for Egypt’s residents to book bus rides at a fixed rate on existing routes.
Users schedule trips, pay online or in cash and are given virtual boarding passes.
Even with fierce competition from the likes of Buseet and Uber vying into premium public transport service, SWVL’s application has been downloaded for well over 360,000 times on Google play store and Apple iStore.
The platform completes 100,000 rides monthly.
It was the first company to introduce the service in Egypt in 2017 before Careem and Uber joined the sector late last year.
Swvl is however different from its competitors because of its series of partnership deals. The startup’s credit facility agreements with Nasser Social Bank and EFG Hermes Bank, and after-sales support and maintenance services with Ford-trained technicians are some of these moves.
What Egyptian SWVL users think about the startup is its priority on affordability, comfort, and safety.
Not Afraid Of Competition
Although Swvl is the first riding app to offer bus services in Egypt, giant transportation startups Careem and Uber have recently offered their own bus services.
Mostafa Kandil, Egyptian CEO and founder of Swvl, has however noted that the joining of Uber and Careem to the industry has not influenced Swvl’s growth asserting that they have witnessed remarkable development since the two competitive players have launched. In 2018, the startup was valued at nearly US$100 million, becoming the second Egyptian company after Fawry to reach these figures.
The startup has recently signed an agreement with Ford motor company to deploy more cars on the road. Ford Transit, which the startup intends to use is already the third best selling van of all times. SWVL is already in possession of about 100 Ford Transits. Hazem Taher, SWVL’s Head Marketing Manager, said the vans were ready to go and they’re excited to push them on SWVL’s route.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Uber IPO is going to happen soon but the company has posed a loss of over $1 billion in the first three months of 2019 alone. However, one group of people who are going to benefit the most are the ride-hailing company’s drivers. Uber said each driver could get up to $40,000 each as a “driver appreciation reward” ahead of the company’s initial public offering. With its first IPO due earlier in May, the ride-hailing company is aiming for a valuation of $91.5 billion. If this becomes successful, Uber would become among the top ten US company with the largest U.S. listing in years. Plus: this is also a test of investor appetite for a high-growth but highly unprofitable business.
Here is How Everything Is Going To Play Out
To qualify for the reward, drivers must have completed at least 2,500 trips, including one this year, as of April 7, and have an account in good standing. Uber said payouts to non-US drivers would be adjusted to reflect different average hourly earnings across regions.
For US drivers, Uber said eligible US drivers would receive one of six cash rewards based on the number of Uber trips they’ve completed: $100 for making at least 2,500 trips, $500 for at least 5,000 trips, $1,000 for at least 10,000 trips, $10,000 for at least 20,000 trips, $20,000 for at least 30,000 trips, and the largest, $40,000, for at least 40,000 trips.
About $300 million has been budgeted by the company for more than 1.1 million drivers worldwide for payment on or around Saturday
In a regulatory filing on April 26, 2019, Uber is going to sell every share on its first day of trading at a price range of $44 to $50. This is not a big deal anyway.
The company will sell 180 million shares in the offering to raise up to $9 billion.
Existing shareholders in Uber, holding over 27 million are ready to raise as much as $1.35 billion from those shares. This is going to make them instant multimillionaires if this happens.
Of the stock being sold in the IPO by existing Uber investors, 6.86 million shares are from Uber co-founders Travis Kalanick and Garrett Camp, meaning the two men could jointly pocket $343 million if the IPO prices at the top end of its current range.
Already, PayPal, an American online payment solution, is making the first move by agreeing to purchase $500 million of stock in a private placement at the price the IPO eventually settles at.
Uber management is gearing up for what is going to be the hardest and the most stressful roadshow ever, as they would begin a difficult task of pitching Uber to public markets investors.
A valuation of $91.5 billion is already a handwriting on the wall. In 2018, Uber’s underwriters or investment bankers told Uber they would raise $120 billion when the IPO is ready to go, but then, this sudden adjustment in the valuation brings the company closer to the $76 billion valuation it attained in its last private fundraising round in 2018.
This adjustment of valuation expectations reflects the poor stock performance of its smaller rival Lyft Inc following its IPO last month. Lyft shares ended trading on Thursday down more than 20 percent from their IPO price amid investor skepticism over its path to profitability. The most probable guess, of course, why Uber’s IPO would be more successful would be that Uber has more market share than Lyft, and would definitely perform better than Lyft.
Uber’s projected $91.5 billion market capitalization would make it bigger than General Motors (GM), Ford (F), Fiat Chrysler (FCAU), Tesla (TSLA), Honda(HMC), Volkswagen (VOW.Germany), Continental (CON.Germany), the entire U.S. rental car industry, and most of the aftermarket car-parts business. Only Toyota (TM), with a market capitalization of $200 billion, is larger.
When will Uber ever make profit? This question is going to be quite depressing for the company. The company reported in the filing, a net loss attributable to the company for the first quarter of 2019 of around $1 billion on sales of roughly $3 billion.
How will Uber navigate the gradual movement to self-driving vehicles; would Uber’s business model support higher driver costs from minimum wage rules?
How will Uber handle sexual harassment allegations, a massive data breach that was concealed from regulators, use of illicit software to evade authorities and allegations of bribery overseas, going forward?
“When it comes to Uber, we believe there are still questions over the current car-sharing model, the economics of which are not immediately or obviously attractive for sustainable, long-term investment,” Mark Hargraves, head of Framlington Global Equities, wrote in a note.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
