Question
Uber's approach to fundraising has significantly influenced strategies in the startup ecosystem. Unlike traditional companies that go on roadshows to meet investors, Uber created the HomeShow, which required investors to come to Uber's headquarters and compete to invest in the company. This approach not only created a sense of urgency and competition among investors but also allowed Uber to dictate terms. This strategy has been adopted by some startups to gain leverage during fundraising. However, it's important to note that this approach requires a highly desirable product or service, and a strong market position, as was the case with Uber.
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Investors were desperate to invest in Uber, and Kalanick took advantage. Unlike other companies which went on a roadshow to meet investors and raise money, Uber created the HomeShow, which forced investors to come to Uber's headquarters and compete to invest in the company. Due to his inherent mistrust of VCs, Kalanick presented poor terms, which stripped investors of the right to see Uber's financials and offered them ordinary voting shares instead of supervoting shares. When Google Ventures invested $250 million at a valuation of $3.5 billion, it got only limited information rights and an observer's seat on Uber's board. In 2016, Uber raised a massive $3.5 billion from the Saudi's Public Investment Fund, which valued the company at an unprecedented $62.5 billion. The deal gave Kalanick power to appoint three additional Board members and cemented his hold on Uber.
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