The Timeline of Billions.
Toyota, the world’s largest automaker, announced that it’s making a “strategic investment” in Uber.
The two companies have inked a memorandum of understanding “to explore collaboration, starting with trials, in the world of ridesharing in countries where ridesharing is expanding, taking various factors into account such as regulations, business conditions, and customer needs.”
And it comes with some serious bucks, presumably, courtesy of Toyota Financial Services Corporation and Mirai Creation Investment Limited Partnership.
So they will “create new leasing options” for Uber drivers – presumably for the remaining years before they’re being replaced by self-driving cars, on which both companies are also furiously working, as is everyone else. The idea is that Uber drivers will be able to lease Toyotas from Toyota Financial Services “and cover their payments through earnings generated as Uber drivers.” And this:
Toyota and Uber also will explore collaboration in a variety of other areas, such as developing in-car apps that support Uber drivers, sharing knowledge and accelerating their respective research efforts, and establishing a special fleet program to sell Toyota and Lexus vehicles to Uber drivers.
Uber said in a statement to TechCrunch, “We are proud to partner with Toyota in a variety of ways, including the expansion of our vehicle financing program.”
There was a lot more feel-good corporate blah-blah-blah, but the one thing everyone wants to know, the dollar amount of the investment, was not disclosed.
So how much money has Uber picked up so far from investors?
We don’t know because the amounts in some of the last rounds were not disclosed, but it has turned into a huge kitty, even if the exact number of billions remains vague.
If I counted right, and not including the “undisclosed” amounts, Uber picked up $7.8 billion of disclosed amounts plus the undisclosed amounts via 16 rounds from 23 investors: venture capital firms, corporate investors like Baidu, private equity firms, hedge funds, family offices, mutual funds, and other types of investors – not yet including the Toyota deal, which is just a Memorandum of Understanding at this point.
With all this money to blow, and the corporate backers to help Uber move in different directions, successfully or not, Uber has the ability to run over taxi companies – most of which are fairly small enterprises compared to Uber – shred city, state, and national regulations around the world that govern taxis, settle numerous legal challenges, and do whatever else it might want to do, all without breaking a financial sweat. Billions can blow open a lot of doors.
So why even bother with an IPO – and expose yourself to the public and regulatory scrutiny that come along with it? A tricky question. While Toyota, Baidu, and other strategic investors may have other priorities than maximizing their return on investment, VCs, PE firms, hedge funds, and mutual funds do not. They eventually want to get their money out and realize their hoped-for mega-profits.
The auto industry and the industries supporting it are crucial to the US economy and jobs. It accounts for a good part of US manufacturing. Auto sales make up 21% of retail sales. They’re up 4.5% year-over-year, after a record 2015, even as the rest of brick-and-mortar retail was weak. All of it has been booming for years! But when the flow of money slows, the entire growth machine starts grinding down. Pressures are already building up. Read… What Will Sink the US Auto Boom?