Just weeks before the initial public offering of Uber, the company has announced a deal for a $1 billion investment in its self-driving vehicle unit.
Together, Toyota and Denso, a Japanese auto-parts supplier, are set to invest $667 million, while the Vision Fund of Softbank will invest $333 million. SoftBank is already considered ad the largest shareholder of Uber and Toyota invested $500 million in 2018.
The investment values the division that is known as the Advanced Technologies Group (ATG) at $7.25 billion. It also creates a newly formed corporate entity that has its own board. The representatives from the investors attended the signing ceremony at the San Francisco headquarters of Uber earlier today alongside Dara Khosrowshahi, the CEO of Uber, and Eric Meyhofer, the ATG leader.
Last week, Uber officially kicked off its IPO process with the public filing of its prospectus. The next stage will be a roadshow at the end of the month, where the executives of Uber and bankers will sell the story and business model of the ridesharing startup to potential public market investors.
Lyft, the Smaller ridesharing rival of Uber, went public at the end of last month. It has since struggled in public markets as the investors question its massive losses and path to profitability.
While Uber is considered to be far more global and diversified as compared to Lyft. It burned through about twice the amount of cash in 2018. Like Lyft, it is expected to price its IPO at a premium to its last private market valuation.
The new investment gives Uber new capital to develop technology for self-driving cars and trucks, that it will argue to investors to be critical for its long term business model.
Toyota is also committing to contribute up to an extra $300 million over the next three years to help in covering the costs in the newly formed unit.