Article

Students at Le Web 2014
Students at Le Web 2014 10 December 2014
Categories

Is Fundraising Becoming The New National Game Of Web Startups?

As seen at Le Web 2014, companies such as Uber are being valued at millions of dollars. Is this viable and can other startups expect the same evaluation?

At LeWeb 2008, Travis Kalanick got stuck in the streets of Paris because of exceptional snow. Looking desperately for a taxi, he thought about using his cellphone to get one quickly. Uber was born!

Eight years later, the success of Uber has created a snowball effect in the web startup field. For the first session of LeWeb 2014, Fred Wilson, the influent managing partner of Union Square Ventures, has been asked about the astronomical expecting valuation of Uber.

Read more on Digital Doughnut

After having raised 1.2 billion dollars in summer, to reach a global valuation of 18,2 billion dollars, Uber is going back to investors at the end of this year and the experts consider that it’s IPO, expected in a couple of years will propel Uber at a 40 - 100 billion dollar valuation. 

 

Uber is not an exception in this sector. A few hours later on the same stage, Peter Pham was sharing his 200 million dollar fundraising experience. Those dizzying numbers have become part of the every day life of entrepreneurs and venture capitalists in the Silicon Valley and worldwide.

Seen from the outside, that looks like a new technological bubble. An overvaluation mechanism that might end up with a big collapse and important losses.

But listening to Fred Wilson this potential valuation is not crazy. In fact, looking at the economic reputation, the revenues of Uber, the business model and the evolution perspectives of the service, a wise investor could legitimately invest money in Uber.

Looking at the figures, Uber might generate a 10 billion dollar revenue at the end of the year. About 20% of this turnover will be captured by the company, the 80% goes to the drivers. If we consider the fact that their charges are quite limited, the benefits are still high and the profitability of the company should be maintained for years. That give us a careful ratio of 1 to 20 between the annual company revenue (2 billion dollars) and the low expected stock valuation (40 billion dollars).

At this point the investor can bet on the fact that the revenu will increase and the profitability will continue for 20 years. The 1 to 20 ratio seems rational!

Fred Wilson ended his intervention about viral valorisation by adding that we are not facing a frightening technological bubble, but the valuation system should evolve, taking in account the exceptional performance of the sector at the moment.

Follow @Studentsatleweb to get live updates from Le Web 2014 with brilliant content from student bloggers on www.studentsatleweb.com

 

Please login or register to add a comment.

Contribute Now!

Loving our articles? Do you have an insightful post that you want to shout about? Well, you've come to the right place! We are always looking for fresh Doughnuts to be a part of our community.

Popular Articles

See all
Is Email Dead, Or Are We Just Bored With It?

Is Email Dead, Or Are We Just Bored With It?

In today's digital era dominated by social media, instant messaging, and collaboration tools, one question looms large: Does email still have a role to play? Some argue that it's on life support, while others...

Julia Herd
Julia Herd 22 November 2023
Read more
The Innovative Digital Marketing Strategies Leveraging AI

The Innovative Digital Marketing Strategies Leveraging AI

This article will assist digital marketers in grasping the advantages and disadvantages of employing artificial intelligence in their online marketing tactics. You will learn about the effects of AI on online...

joseph chain
joseph chain 17 October 2023
Read more
Best Practices for Effective Dashboard Design

Best Practices for Effective Dashboard Design

In the age of data-driven operations, dashboards have emerged as an essential tool for businesses. They serve as a gateway to data, enabling users to monitor, analyze, and visually represent vital performance...

Ravi Shukla
Ravi Shukla 17 November 2023
Read more
Customer-Centric Marketing: The Heartbeat of Modern UK Retail

Customer-Centric Marketing: The Heartbeat of Modern UK Retail

The UK retail scene, with its diverse offerings from luxe brands to quaint local stores, is witnessing a paradigm shift: The rise of customer-centric marketing. This isn’t just about selling; it’s about understanding,...

Andrew Addison
Andrew Addison 21 November 2023
Read more
How to Review a Website — A Guide for Beginners

How to Review a Website — A Guide for Beginners

Whether you're a startup or an established business, the company website is an essential element of your digital marketing strategy. The most effective sites are continually nurtured and developed in line with...

Digital Doughnut Contributor
Digital Doughnut Contributor 7 January 2020
Read more