Will this Investment Keep Ridesourcing on the Road?
The Japanese internet and communication tech organization, Softbank Group, has agreed to make a multi-billion dollar investment into Uber. Softbank and San Francisco-based Dragoneer Investment Group will initially drop a direct investment of $1 billion. They will also buy up to $9 billion worth of shares from employees and stakeholders in a tender offer. These shares are expected to be sold for less and will also allow early investors to sell their stakes as well; an option that until now was prohibited. One of the earliest investors, Benchmark Capital, has agreed to drop the lawsuit between former Uber CEO, Travis Kalanick, as part of the agreement. Softbank has not yet commented on their newest investment in Uber.
This consortium established the long-awaited agreement since going public regarding the potential investment in October. The tender offer is set for November 28, granted that an adequate number of Uber investors agree to sell their shares. Uber’s current challenge is to now attract enough former shareholders and persuade them to give up their stakes for cash. This will also cause changes in the corporate governance of Uber positioning themselves to go public by 2019.
“We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment. We believe this agreement is a strong vote of confidence in Uber’s long-term potential. Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance,” said an Uber spokesman.
Uber has now come across powerful support for their diverse products and services. Take for instance, Uber Freight which is essentially ridesourcing for carriers and shippers that simplifies the transportation process and provides immediate payment for its users. Uber Eats delivers all types of food to your location and Uber Pool connects you with rideshares that are traveling in similar directions. Let’s not forget their Advanced Technology Group covers the ins and outs of Uber’s next-gen tech such as the designs and systems of autonomous vehicles.
Despite Uber’s accomplishments and a commendable vision for the future, there is still a lot at stake for ridesourcing as a whole. Uber’s image hit rock-bottom earlier this year after being accused of sexual assaults occurring internally and allegedly misappropriating trade secrets from Google’s self-driving division; Alphabet. Furthermore, Uber is confronted by determined competitors in Southeast Asia and India. And in the U.S., the ridesourcing space is highly competitive and creeping with what seems monthly challenges. Lyft, Uber’s number one rival has aggressively pushed its marketing efforts and has used to their advantage the various scandals that have plagued Uber, by positioning themselves as more ethical.
In addition, Uber’s fleet of autonomous cars had one of the worst performing demonstrations earlier in May. Last week in Las Vegas, French autonomous taxi-service, Navya, had one of their vehicles nearly get in a wreck with a semi just within hours after opening public test runs along the strip. Uber also plans to get off the streets and go back to the future by teaming with Nasa for their flying Uber Air Vehicles. However, the company along with its competitors, are having difficulty approaching the plethora of regulations regarding autonomous driving and air travel.
So far, the appeal and credibility for ridesourcing and these types of technologies have been questionable to say the least. Nevertheless, it seems as if these forms of traveling are only going to become more popular as we move further into a much stronger interconnected and automated future. Softbank’s agreement with Uber is a testament to these beliefs and has the potential to revolutionize the roads at home and abroad.
Do you think this deal with Softbank will turn the company’s brand around or will this new corporate governance only add fuel to the fire? Do you trust in the future envisioned by Uber and other ridesourcing companies? Let us know what you think.
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