Uber doesn’t have plans to go public anytime soon.
If investors want to cash in on multi-billion-dollar startup Uber now, there’s only one real way to do it.
Uber restricts unapproved secondary sales, so the only option early angel investors and employees have is to sell their shares back to the company, Fortune’s Dan Primack reports.
“The company basically told them that it isn’t planning to go public anytime soon, so this would be their only real way to sell,” one Uber investor, who has not sold any shares, told Primack. “They also asked sellers to… [agree] to lock up the remainder of their stock, which kind of is de facto acknowledgment that the shares weren’t really locked up. I know a couple of parties who sold [back to the company] because they decided liquidity at an artificially low price was better than no liquidity at all.”
Uber is currently valued at $US18 billion following a $1.2 billion funding round earlier this year. It’s not clear whether Uber had the term sheets in hand before it changed its bylaws to restrict unapproved secondary sales, but it meant that Uber could resell the stock it bought back at a higher price to hedge funds in its $US1.2 billion round.
“It’s nothing more than greed,” one of Uber’s angel investors told Primack. “And they can get away with it because no other popular startup is going to take your money if you’re known as the guy who sued another popular startup. It’s a no-win situation.”
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