Uber tops the world’s 10 most valuable start-ups: who needs profits when you have VC?

6 Aug 2015

At US$50bn, Uber is the world’s most highly-valued start-up. Photo via focal point/Shutterstock

Becoming a venture-backed private company valued at US$1bn or more was once considered so rare an achievement that it earned the title ‘unicorn’.

There are now more than 100 unicorns in the wild, and the top tier’s eye-watering valuations are nothing short of fantastical.

At the end of 2014, I totted up some of the year’s most eye-popping tech start-up valuations – every one of them comfortably surpassing the US$1bn mark.

From January 2014 to August 2015, The Wall Street Journal’s billion-dollar start-up club (based on figures from Dow Jones VentureSource) grew from 42 members to 107. Not only that, but the figures for the top-valued company rocketed from US$11.7bn to US$50bn.

Most (71) of these companies are based in the US, 26 in Asia, nine in Europe, and just one lies outside this broad catchment area: Israeli start-up IronSource, valued at US$1.1bn.

All of these companies have raised money in the past four years and have at least one venture-capital firm as an investor. Looking at the top of the pile – the world’s 10 highest-valued start-ups – there are two companies blazing a trail and pushing the charts to new heights.

World's most valuable start-ups

Chart via Statista.com

Growth first, profit later

Uber, considered by many industry observers as a dead cert for an IPO, has been dogged by issues ranging from passenger safety to legal compliance to backlash from taxi-drivers, but nothing has dented this transport app’s VC appeal.

The latest in Uber’s run of bad press is a review of internal financial documents obtained by Gawker, which revealed that the company has been losing money since 2012.

The unaudited revenue expense breakdown published by Gawker shows that, though Uber’s revenue is healthy and growing, the company recorded a net loss of more than US$56m in 2013, and US$160m in 2014.

‘Shock, horror, Uber makes a loss. This is hardly news and old news at that’

Of course, Uber responded in typical swaggering style.

“Shock, horror, Uber makes a loss. This is hardly news and old news at that,” the company told Business Insider in a statement.

“It’s the case of business 101: you raise money, you invest money, you grow (hopefully), you make a profit and that generates a return for investors.”

It’s a glib statement, but it nails the modus operandi for many of these skyrocketing start-ups: growth first, profit later.

Uber image by focal point via Shutterstock

Elaine Burke is the editor of Silicon Republic