Though still a cool billion short of ANT Financial's $4.5b Series B in April, Saudi Arabia's Public Investment Fund's $3.5b investment in Uber raised a number of eyebrows.
Some have pointed to its significance as an indicator of the reduced importance of public markets for technology firms (Uber has now raised $11b from private investors).
Others are pointing to the potential damage that this fundraising could have. On-demand rides are just one area where cash is being ploughed into discounts to ensure market share capture. And while low prices mean that consumers win in the short term, what it means in the long-run is unclear as Uber is clearly aiming for complete control of its market, and investors will eventually want to see returns.
Uber isn't alone. Across Silicon Valley, companies are pouring millions of dollars into money-losing price wars, in hope that they'll eventually be able to turn a profit once their competitors are driven out of business. For example, in recent years there have been dozens of companies — including Instacart, DoorDash, Blue Apron, GrubHub, and HelloFresh — offering app-based food delivery services. Amazon and Google have also gotten into the market with delivery services of their own. While the exact business models differ, the basic idea is very similar: People use the internet to order food. And because there are so many companies with similar business models, they wound up taking big losses in an effort to gain market share. Recently companies have started slashing compensation for their delivery drivers in an effort to finally turn a profit.