Why Uber’s new deal comes as a surprise July 22, 2021
The post-pandemic Uber is certainly not the same business it came in as.
Throughout the pandemic, as its core ride-hailing business flagged, the company focused on the parts of its business that were growing.
That focus, at least in its dealmaking, boiled largely down to prioritizing food delivery. Over the last year, the company under CEO Dara Khosrowshahi has offloaded its air taxi foray as well as its autonomous vehicle initiative that had long been marketed as the key to its future. Instead, it executed a series of deals in the delivery space, snapping up alcohol delivery business Drizly for $1.1 billion in February and acquiring the stake it did not already own in grocery delivery startup, Cornershop, for an undisclosed sum in June.
On Thursday, Uber announced yet another deal hinting at what the company is banking on for future profitability.
But this one was somewhat of a surprise. After focusing so much of its energy on food delivery, the company announced that it had acquired Transplace, a transportation logistics company, through its trucking unit, Uber Freight, for about $2.3 billion in cash in stock.
And there appeared to be signs that Uber was becoming more wary of the Freights business. The acquisition of Transplace, which sells logistics management software and also connects trucks to shippers, comes after Uber sold a $500 million stake in Uber Freight to Greenbriar Equity Group in October. CFO Nelson Chai described the funding as an investment that would allow Uber to “fund freight until it’s profitable” in a call with analysts a month later. But in the same call, an analyst questioned how well the business fit together with Uber’s ride-hailing and food-delivery ones, which can at least share drivers.
Still, even as Uber under Khosrowshahi backs away from Uber’s more far afield bets, he has seen Freights as something of a happy medium. Here he is, responding to that analyst in the November earnings call: “Freight is focused on really delivery from warehouse to store. Eats and our Delivery business is focused on delivery from store to last mile, to home… We’re betting for 3 to 5 years from now where we start chaining together warehouse to last mile.”
Air taxis may be out for Uber, but Freight, it seems, is in.
The acquisition of Transplace meanwhile is one that the company expects to speed up Freight’s “path to profitability.” In the press release announcing the deal, Uber says Freight is expected to breakeven on an adjusted EBITDA basis by the end of 2022.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
Jessica Mathews compiled the IPO and SPAC sections of the newsletter.
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VENTURE DEALS
- Carbon Health, a San Francisco-based leading healthcare provider, raised $350 million. Blackstone's Horizon platform led the round.
- Bolt, a San Francisco-based checkout software startup, is raising $333 million in Series D funding at a $4 billion valuation, per the Information. Hedosophia is leading the round.
- UVeye, an Israel-based supplier of high-speed vehicle inspection systems, raised $60 million. CarMax, W.R. Berkley Corporation, and F.I.T. Ventures invested.
- YOOBIC, a New York City-based digital workplace for frontline teams, raised $50 million in Series C funding. Highland Europe led the round and was joined by investors including Felix Capital, Insight Partners, and BNF Capital.
- Pangaea Holdings, a Los Angeles e-commerce company focused on men’s personal care, raised $53 million from Eurazeo. It raised a separate $15 million in Series B funding from investors including Unilever Ventures, GPO Fund, Base10 Partners, and Gradient Ventures.
- Accion Systems, a Boston-based maker of electrospray in-space propulsion systems, raised $42 million in Series C funding. Tracker Capital Management led the round.
- Sonatus, a Sunnyvale, Calif.-based automotive software company, raised $35 million in Series A funding. Investors included Hyundai Motor Group’s Kia Corporation, SAIC Capital, LG Electronics, Marvell, UMC Capital, and Wanxiang Group Company.
- Properly, a Canadian real estate brokerage, raised $35 million in Series B funding. Bain Capital Ventures led the round and was joined by investors including Intact Ventures and FCT.
- Aruna, a Jakarta-based fisheries and marine tech company, raised $35 million. Prosus Ventures and East Ventures led the round and was joined by investors including SIG, AC Ventures, MDI, and Vertex Ventures.
- Safe Security, a Palo Alto, Calif.-based cyber risk company, raised $33 million from BT.
- LiveControl, a Santa Monica, Calif.-based remote videography company, raised $30 million in Series A funding. Coatue led the round and was joined by investors including First Round Capital, Box Group, Susa Ventures, and TriplePoint.
- Qure4u, A Bradenton, Fla.-based digital health company, raised $25 million. Volition Capital led the round.
- Sololearn, an Armenia-based coding instruction and community app, raised $24 million in Series B funding. Drive Capital led the round and was joined by Learn Capital and Prosus Ventures.
- Dwolla, a Des Moines, Ia.-based maker of an API for payments, raised $21 million. Foundry Group led the round and was joined by investors including Park West Asset Management, Union Square Ventures, Detroit Venture Partners, Firebrand Ventures, and Next Level Ventures.
- Thesis, a New York City-based crypto startup, raised $21 million in Series A funding. Investors include ParaFi Capital, Nascent, Fenbushi Capital, Polychain Capital, and Draper Associates.
- Bbot, a New York City-based ordering and payments process for restaurants, raised $15 million in Series A funding led by CRV.
- obé Fitness, a New York City-based digital fitness platform, raised $15 million in Series A funding. CAVU Venture Partners led the round and was joined by investors including Athleta, Samsung Next, Tiffany Haddish, Wheelhouse Entertainment, WW International, Cassius Ventures, Ludlow Ventures, Harris Blitzer Sports Entertainment, and BDMI.
- Anduin, a Charlotte, N.C.-based invoicing and billing firm, raised $14 million in seed funding. Revolution Ventures led the round.
- Prodigal, a Mountain View, Calif.-based software maker for loan servicing and collection operations, raised $12 million in Series A funding. Menlo Ventures led the round and was joined by investors including Accel, Y Combinator, and MGV.
- CITYROW, a New York City-based indoor-rowing fitness brand, raised $12 million in Series A funding. JW Asset Management led the round and was joined by investors including Sol Global and K2.
- Gravitee.io, a London-based API management platform, raised $11 million in Series A funding. AlbionVC and Oxx led the round.
- Guidewheel , a San Francisco-based manufacturing downtime tracker, raised $8 million in Series A funding. Greycroft led the round.
- Outplay, an Indian outbound sales platform, raised $7.3 million in seed funding. Sequoia Capital India led the round.
- Adway, a Santa Monica, Calif.-based digital ad network, raised $6 million in seed funding. Upfront Ventures led the round and was joined by investors including Revel Ventures, Watertower Ventures, and Inflection Capital.
- CloudTruth, a Boston-based company focused on the cloud, raised $5.3 million. Glasswing Ventures and Gutbrain Ventures led the round and were joined by investors including Stage 1 Ventures and York IE.
- Okendo, an Australian customer marketing platform for smaller brands, raised $5.3 million in seed funding. Index Ventures led the round.
- Allocate, a San Francisco-based platform for investors to discover and invest in venture funds, raised $5 million in seed funding. Investors included Urban Innovation Fund, Tusk Venture Partners, Basis Set Ventures, Liquid2 Ventures, Fika Ventures, Ulu Ventures, and Anthemis Group.
- Frizata, a Buenos Aires-based frozen food company, raised $5 million in Series A funding. SP Ventures led the round.
PRIVATE EQUITY
- Bain Capital Private Equity acquired PartSource, a Cleveland, Oh.-based hospital supply chain marketplace, for $1.3 billion.
- KKR invested in Sol Systems, a U.S.-based renewable energy company. KKR is also committing up to $1 billion to acquire shovel-ready projects with Sol.
- Audax Private Equity invested in Flashpoint, a New York City-based cybersecurity threat detection company. Financial terms weren't disclosed.
- FPE Capital acquired Zest Technology, a U.K.-based employee benefits software provider. Financial terms weren't disclosed.
- insightsoftware, backed by Hg, acquired CALUMO, an Australian-based provider of budgeting and planning software. Financial terms weren't disclosed.
- JGB Enterprises, backed by HCI Equity Partners, acquired Industrial, Petroleum and Mining Supplies, a Toronto-based seller of hydraulic, industrial and propane hose, fittings and accessories.
- KKR formed Sapphiros, a diagnostics platform, which acquired interest in Biocrucible, a British molecular diagnostics company, and GrapheneDx, a consumer diagnostics company. Financial terms weren't disclosed.
- KKR agreed to acquire Teaching Strategies, a provider of curriculum, assessment and family engagement tools for early childhood education. Financial terms weren't disclosed.
- Physical Rehabilitation Network, backed by Gryphon Investors, and MemorialCare acquired Complete Balance Solutions Institute for Physiotherapy, a California-based physical therapy provider. Financial terms weren't disclosed.
EXIT
- Lightyear Capital agreed to acquire Wren Sterling, a London-based financial planner, from Palatine Private Equity. Financial terms weren't disclosed.
OTHER
- A unit of Great-West Lifeco plans to acquire the full-service retirement business of Prudential Financial for $3.6 billion.
IPO
- KakaoBank, a South Korean digital bank, plans to raise $2.2 billion in an initial public offering in the country, per Bloomberg. Communications company Kakao owns a majority stake in the company.
- Ryan Specialty Group, a Chicago-based international specialty insurance company, raised $1.3 billion in an offering of 56.9 million shares priced at $23.50 per share. Onex Corporation backs the firm.
- Traeger, a Salt Lake City-based barbecue grill company, plans to raise $423.5 million in an offering of 23.5 million shares priced between $16 and $18 per share. The company posted $545.8 million in revenue in 2020 and net income of $31.6 million. AEA Investors, the Ontario Teachers' Pension Plan and Trilantic Capital Partners back the firm.
- Caribou Biosciences, a Berkeley, Calif.-based clinical-stage biopharmaceutical company, now plans to raise up to $272 million in an offering of 17 million shares priced between $14 and $16 per share—it previously planned to raise up to $216 million. It posted $12.4 million in revenue in 2020 and a loss of $34.3 million. DuPont and F-Prime Capital back the firm.
- Insilico Medicine, a Hong Kong-based company that uses artificial intelligence for drug and aging research, may file for an initial public offering in the U.S., according to Bloomberg. Warburg Pincus backs the firm.
SPAC
- Core Scientific, an Austin, Tex.-based Bitcoin mining company, will go public via a merger with Power & Digital Infrastructure Acquisition Corp., a SPAC backed by BlackRock. A deal would value the company at $4.3 billion.
- Olive.com, a Chicago-based car warranty solution company, and its financing affiliate PayLink Direct will go public via a merger with MDH Acquisition Corp., per Bloomberg. A deal values the company at $960 million.
F+FS
- Five Elms Capital, a Kansas City, Mo.-based private equity firm, closed Five Elms V with $780 million.
- Baird Capital, the Chicago and London-based private equity and venture capital arm of Baird, closed its second Global Fund with over $340 million.
PEOPLE
- Vector Capital, a San Francisco-based private equity firm, promoted Sandy Gill to managing director. It also promoted Stephen Goodman, Amir Ravandoust, Gabriel Shields-Estrada, and Tom Smith to principal.
- Playground Global, a Palo Alto, Calif.-based venture capital firm, promoted Victoria Sun to principal.
- Capital, a San Francisco-based private equity firm, promoted Matt McCabe to principal.
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