Uber China’s Series B Funding, Stuck in the Mud?

Half a year has passed since Uber China started a series B round of financing in June. During the past months, rumors of its failure in financing were often heard, which in turn added up to the difficulties of the tycoon's Chinese operations. But recently, word has it that Guangzhou Automobile Group Co Ltd, after Baidu and Hainan Airlines, has also promised to invest.

On Nov. 16, Ms. Liu Zhen, Uber China’s head of operations, said to a press: “B round should be announced soon, supposedly in one or two weeks. But it’s hard to say whether the investors will be state-owned capitals or private capitals. Let’s just call them local capitals.” Shortly after that, on Nov. 25, In a press conference Ms. Liu said that the B round funding had closed, but little was revealed regarding the amount of funding or the investors.

However, in December, messages from Uber has changed: “Uber China is progressing steadily in latest funding”, adding that details about this round and the person in charge would be revealed after Christmas. On the evening of Dec. 21, Guangzhou Automobile Group Co. Ltd., another investor after Baidu and Hainan Airlines, announced its agreement to conduct strategic collaborations in terms of Uber China’s funding operations. Uber China has also confirmed that the company will be a major investor in its B round of financing.

Meanwhile, China’s state-owned investment institutions, which Uber’s founder Kalanick once counted on, are now making it clear that they have not invested in Uber. According to Caixin, one of China’s leading financial media, a previous funding document of Uber has claimed to have Hillhouse Capital, China Investment Corporation and Pingan Insurance on board. But so far all of these companies have denied either publicly or in private. A source from China Investment Corporation even said that the company had never thought about investing in Uber at the first place.

A popular belief has formed among investors: given that commuting is a tough issue in public policy, and in Uber’s case, transportation and the city’s data are also involved, it is no wonder that Chinese government is concerned about the operations of a foreign company in this field, which is why state-owned capitals are less likely to be seen in the new funding round.

Apart from that, investing or not is also about choosing sides, in which case no one wants to be on the opposite side of Alibaba and Tencent. An investor who has approached Uber said that he once explained to a senior executive of Alibaba that the money would go to Uber global instead of Uber China, only to be replied: “is there any difference between investing global and investing in China? It’s same company.”

Uber’s competitors are also standing in the way of the investment from large institutions. According to Caixin, an investor said China Merchants Bank (CMB) had approached Uber China before but then was persuaded to abandon the deal. Huatai Insurance gave up on the launch of $200 million financial products. China Life Insurance, an investor of Uber global’s last funding, has also left the new round, while Hillhouse Capital is merely providing bridging capitals.