Let’s be honest, if you’re an entrepreneur, own a small company, or are just a dedicated dreamer with a great idea, at some point, you’ve thought of how great it would be to raise $1 billion in investment capital. In fact, for many of the aforementioned people, it’s not just a dream, but also a goal. But how is it done? Well, if there were an easy answer, we’d all be billionaires. However that shouldn’t deter you. Nothing in the business world is easy, especially when it comes to fundraising. Where there’s a will, there’s a way. And in the case of America’s hottest ride sharing company, the way is paved with gold.
Raising a billion dollars; twice
In the case of Uber, raising record-setting capital didn’t just happen overnight. The company, which currently operates in 228 cities and 45 countries, started with a simple idea, and a great market to test it out on. Developing a great product, with low overhead, was critical to them in the beginning. The San Francisco company developed a basic app to cater to an exceptional service need, and built a strong network long before any serious money was invested into them. Then, in 2010 they calmly raised over $11 million, and were off to the races.
After the initial funding round, they tripled their investments just one year later. Uber is already Silicon Valley’s highest-valued private company. Now, the private company is valued at $17 billion, and going for more. Uber’s CEO Travis Kalanick has set ambitious goals for the future, and in doing so, shows he plans to be around for a long time. Luckily for him, investors agree. Here’s why:
Innovation leads to investment.
In order to raise billions in capital, you need to be disruptive. While the word may be overused, especially in the tech industry, it’s an absolute truth. You need to be aggressive, unconventional, and most importantly, innovative. Uber wasn’t, and isn’t the only company offering app-based ride share and taxi services. In fact, they never were. They are, however, the most innovative. Some may even say the most aggressive. And that’s OK. Uber went after their target market, and boldly ignored their critics. They also went right after their competition, using viral marketing, consumer incentives, and employee incentives to get ahead of the pack.
Another way Uber has innovated is their penetration into new markets. Uber moved, and continues to move into new global markets as fast as any company in the world. Of course, their initial funding and massive budget help, but it’s really their business model that has kept them moving so fast. The demand for their service is high, everywhere. Their model is simple, and their corporate structure is incredibly streamlined. The majority of people who work for Uber are drivers, meaning that employment model is efficient, and cost effective. It also makes it easy to implement in a new city or country, even if it ruffles some feathers in the process, or challenges local transportation laws.
And that brings us to the big reason Uber has been so successful at raising capital. They have courage. Some may even call it arrogance. But when you go for the big investments, you have to be all in, and confident that your product or service can be a game changer. Uber has truly disrupted the status quo in this sense. They’ve been legally challenged by city governments, unions, and even publicly protested, and it hasn’t stopped them yet. This is the type of courage that leads to a billion dollar investment. The foresight to understand that if you believe in your business and its viability, you can hedge your future bets on continued success.
As Matthew Debord from Business Insider recently put it:
The thing is, when you really and truly disrupt established industries, you make enemies. You take their business away, rather than demonstrating a benignly new and different way of doing something that can function alongside the old industry. Or only invalidate the old industry in slow motion, giving everyone who can read the writing on the wall plenty of time to find something else to do.
What’s the lesson learned here? If you’re looking to build your company to a high level, and raise that dream capital you’ve set your sights on, you need to be willing to be aggressive, innovative, and take risks. Investors love the idea of a sure thing, even if it seems improbable. It’s your job to build the foundation, and take the future by the horns. Do you have the right tools to do it?