Report: Uber having trouble raising China fund, expects to lose $3B over next 3 years

Over the past couple of months, we’ve seen news that Uber and Didi Kuaidi will continue their battle for China’s ridesharing app market by raising lots of money: US$2 billion for Didi and US$1 billion for Uber. Didi has already secured its US$2 billion payday, but Uber hasn’t yet announced the completion of its China-focused round. Why is that? According to Sina Tech, it’s because the company is having trouble finding Chinese investors.

On Tuesday, a report emerged on Chinese tech news site Sina Tech citing a “source close to Uber” as saying that the company has had trouble finding first-tier Chinese investors. Uber has reportedly asked Goldman Sachs for help with finding Chinese investors (a technique it has used before) but the company has thusfar been met with mostly rejections from top-tier Chinese and Asian investors.

According to Sina Tech’s anonymous source, when Uber first started looking for investors, it wasn’t giving out detailed financial information about its China business beyond the somewhat questionable one-million-rides-a-day number it “leaked” earlier this summer. But when investors balked at the lack of information, Uber was forced to cough up more, and those numbers apparently don’t look great. Uber reportedly expects to do US$1.1 billion in total sales in China in 2015, but it also expects to post losses of US$1.1 billion there this year. Over the next three years, Uber apparently expects its China business to lose US$3 billion.

Tech in Asia contacted Uber China for comment on the report, and an Uber spokesperson issued the following statement: “We cannot comment on specific numbers. But we’ve seen tremendous enthusiasm – greater than expected – from investors both in terms of the amount invested and the total valuation.”

The Sina Tech report also cites a Chinese investor who asked to remain anonymous as saying that some potential investors have also been put off by the unclear situation surrounding faked Uber rides in China and the exploitation of its promotional subsidies by drivers. Uber says these rides account for just 3 percent of its total bookings, but investors aren’t all convinced. “We have no way of knowing the real number of bookings,” Sina’s anonymous investor source said.

Any report in the Chinese tech press that cites only anonymous sources is worth taking with a grain of salt, of course. And Sina Tech’s parent company Sina, through its Sina Weibo subsidiary, does own a share in Uber rival Didi Kuaidi, so “black PR” certainly can’t be ruled out. But it does seem odd that Uber still hasn’t announced its funding round despite having reportedly nabbed one of Didi Kuaidi’s top investors weeks ago. And investor concern about Uber’s fake rides would certainly be valid – while some of the reporting on that subject has come from tech news portals run by Didi Kuaidi investors, major independent portals have also written about the problem (in fact, it was headline news on Techweb just yesterday).

It’s also possible that China’s investors have just been a bit preoccupied with the stock market crash as it has unfolded over the past few weeks, though. There are reports that Uber China was actually aiming for an IPO in China or Hong Kong next year; the events of the past few weeks may have made that seem less palatable for all involved and changed the calculus somewhat.