Topline: Billionaire Travis Kalanick’s secretive new food startup, CloudKitchens, quietly raised $400 million from Saudi Arabia’s sovereign-wealth fund—the Saudi’s first known deal in Silicon Valley since the murder of American journalist Jamal Khashoggi last year caused numerous investors to boycott Saudi funding, the Wall Street Journal reported on Thursday.
- The deal was completed in January and values the company at $5 billion, the Wall Street Journal reported, citing several anonymous sources familiar with the situation.
- The investment from Saudi Arabia’s sovereign wealth fund reunites Kalanick with one of his old allies: Yasir al-Rumayyan, the fund’s governor, in 2016 spearheaded a $3.5 billion investment in Uber, and when a group of investors ousted Kalanick the following year, al-Rumayyan remained a staunch supporter.
- CloudKitchens does away with traditional front-of-house service by creating commissary kitchens optimized for takeout, which are then rented out to restaurants who want to prepare food exclusively for delivery services.
- The delivery-only food startup buys cheap or rundown properties across the U.S. and elsewhere to build these so-called ghost kitchens; it also operates several of its own delivery-only restaurants.
- Before the Saudi investment, CloudKitchens was funded with $300 million from Kalanick himself—some of which he got from selling Uber shares, the Wall Street Journal reported.
- Kalanick’s startup may eventually put him in competition with his old company, which is also capitalizing on the booming food-delivery trend with its popular service Uber Eats.
Tangent: Meanwhile, over at Uber, things aren’t looking great. The ride-sharing company’s latest quarterly earnings report was far from stellar, showing losses of over $1 billion. The stock has struggled to gain footing since going public in May, and shares plunged further thanks to the post-IPO lockup period—which prevents early investors from selling shares—expiring yesterday. Uber stock hit a new low of less than $26 per share, down from its IPO price of $45 per share.
Crucial statistic: Kalanick, who still owns 4% of Uber and remains a director on its board, has a net worth of $3.2 billion, according to Forbes’ estimates.
Key background: Kalanick, who founded Uber in 2009, was ousted as CEO in 2017 after a series of scandals rocked the ride-sharing company.