UPDATED 12:55 EDT / OCTOBER 02 2020

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Uber’s freight unit picks up $500M investment at $3.3B valuation

Uber Technologies Inc.’s Uber Freight unit, one of the few bright spots in its most recent earnings report, has raised $500 million at a $3.3 billion valuation from an outside investor.

The company announced the news this morning. The investor is Greenbriar Equity Group, a New York-based private equity firm that is taking a minority stake of undisclosed size in the unit as part of the transaction.

Uber, best known for its eponymous ride-hailing service, has expanded into numerous other areas of the logistics sector as part of its quest to drive revenue growth. One such area is cargo shipping. The Uber Freight unit offers a service through which businesses can find logistics providers and book space on a truck similarly to how a consumer would book a ride via Uber’s main app.

Uber Freight was one of the few bright spots in the company’s second-quarter earnings. The unit’s revenue rose 27% year-over-year, possibly thanks partially to the global increase in e-commerce orders, even as the company’s overall revenue dropped 27%. Greenbriar Equity Group is now betting $500 million that this growth will continue.

Uber’s strategy to drive additional freight revenue has focused in part on expanding its product lineup. It debuted two new offerings in September: an Enterprise version of its flagship truck booking service geared toward large organizations and a new tool called Uber Freight Link. The latter product allows companies to use Uber’s freight orchestration features for managing shipments they arrange outside its truck booking service. 

Uber said in a release that the new $500 million capital injection will be used to expand the unit’s “logistics platform and accelerate product innovation.” In an accompanying statement, Uber Freight head Lior Ron said that “we will continue to leverage Uber’s leading marketplace technology, global reach and cross-platform capabilities to accelerate our growth and continue to lead the industry forward.”

Uber’s strategy for the freight market has evolved considerably over the years. Originally, the plan was to build self-driving trucks that can deliver cargo without a human behind the wheel, but the company shuttered its self-driving truck development operation in 2018. The subsequent decision to focus solely on freight brokerage and management software helped the groundwork for Uber Freight’s recent growth.

Uber Freight not only increased revenues by 27% in the second quarter but also managed to improve its bottom line. The unit’s net loss decreased from $52 million in the year-ago period to $49 million. 

Image: Uber

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