Uber Empowers Saudi Women
Just after 5 months of raising $2 Billion in Jan 2016, Uber has broken its own record by raising another massive funding amounting to $3.5 Billion in a single round from a new investor, Saudi Arabia’s Public Investment Fund, which is the main investment fund in the kingdom. Now Uber has more than $11 billion on its balance sheet, according to an Uber spokesperson. Women are not allowed to drive in the kingdom, make up 80 percent of Saudi customer base for both Uber and its main competitor Careem. Uber says that its technology supports Saudi Arabia’s plan to bring a further 1.3m women into the workforce by 2030, increasing female labour participation to 30 per cent from 22 per cent at present.
The Public Investment Fund is Saudi Arabia’s main investment fund. As part of the deal, Yasir Al Rumayyan, who oversees the fund, will gain a seat on Uber’s board. This will also give the Middle Eastern government a voice in one of Silicon Valley’s hottest firms. He joins media mogul Arianna Huffington, another recent Uber board appointee. The investement was part of Uber’s most recent round of funding, which totaled more than $5 billion and valued the company at $62.5 billion. Uber plans to use the money to continue its international expansion in the region and elsewhere.
The oil rich nation investing in Uber should not come as a shock to many. While Uber dominates the US ride-hailing market, the company’s ambitions are global in scope, and it is pouring money into building out its presence overseas. Uber has heralded the Middle East and North Africa as one of its fastest-growing regions, and said it will spend $250 million on expansion there. Uber has a great market to capture in the middle east as many of these nations have a law where women cannot drive cars. According to Uber, 80% of their customers in middle east are women. This investment of $3.5 Billion will not only help Uber expand its base in Middle East & Africa but will also help it compete with Didi in China. Uber is already present in nine countries in the Middle East region and says that this is one of its fastest growing market.
Uber claimed to have 395,000 active riders in the Middle East and North Africa as of the first quarter of 2016, up 500% from the same period a year prior, and 19,000 active drivers, a 400% increase. In comparison, Uber says it has 450,000 active drivers in the US, and 1.1 million globally. Uber’s main local competitor in the Middle East is Careem, a ride-hailing startup that got going in Dubai in 2012. Uber has been spending not only to expand but also to defend its territory — which covers 460 cities in more than 69 countries — against incumbents in regions like Southeast Asia and Europe. Careem has grown faster than Uber in the Middle East and north Africa, saying it has 30-40 per cent more customers and employees than Uber’s 395,000 active riders and 19,000 drivers.
China, in particular, is a difficult battleground, as Uber is spending millions in a subsidy war with Didi, the dominant ride-hailing start-up in the country. Saudi Arabia’s $3.5 billion injection into ride-hailing app Uber could be best utilized in the world’s second-largest economy, Zhen Liu, senior vice president of Uber China, said, as the U.S. firm faced down homegrown rival Didi Chuxing. The funds could help Uber China improve on product innovation, quality control, and customer service, which were the company’s three key areas of focus, she told CNBC. In the meantime, Didi Chuxing has continued to gain ground, having recently won $1 billion in investment from Apple. The company, formerly known as Didi Kuaidi, claims it commanded nearly 87 percent of China’s private car-hailing market, completing more than 11 million rides per day.