India To Attract Significant Portion Of Uber's Latest $3.5 Billion Fund

The price war between app-based taxi hailing companies Uber and Ola just got bigger with the former raising $3.5 billion from Saudi Arabia's Public Investment Fund. Uber said that a significant portion of this investment is going to be deployed for India, which is a top priority market for Uber along with China.

The latest round of funding is said to be one of the biggest venture capital investments in history that brings Uber's total fundraising to about $12.5 billion. Its valuation continues to be at $62.5 billion.

Interestingly, this investment comes just about four months after Uber co-founder and chief executive Travis Kalanick said in January this year that they could double their committed investment of $1 billion to $2 billion in India if they see more than five times the return.

"This investment is part of global fund and we are incredibly excited to use this capital in globally strategic markets like India. Having grown exponentially over the last two years, we are bullish on the Indian market and this investment will support the remarkable growth of Uber in India," a spokesperson from Uber India said.

The fresh round of investment raised by Uber is seen as a major boost for the company in its cut throat competition with Bengaluru-based rival Ola, which still enjoys a higher market share. Ola has so far closed over $1.3 billion of external funding from investors such as Tiger Global, Steadview Capital, Sequoia Capital, SoftBank Capital, DST Global, and Baillie Gifford.

While fresh capital is being pumped in, the profitability of these companies still remain a cause for concern. Uber is raising more and more money to be able to sustain the losses for a longer duration and eventually turn profitable once the competition is driven away. Its rival Ola will either have to raise as much money to sustain as long or come up with a strategy or technology so unique that they become the preferred app and continue the higher market share.