Uber has raised a mind-boggling $1.2 billion in funding

Uber just became one of the most valuable tech startups in history. Co-founder and CEO Travis Kalanick announced that investors are pouring another $1.2 billion into Uber in a funding round that values the five-year-old company at $17 billion. Though nine and 10-figure deals have become common enough in Silicon Valley to seem almost normal, the news may leave many people out in the real world scratching their heads. Does Uber–an app-ified version of the cab business–really need that much money? Given the scope of Uber’s ambition, it just might.

Uber Inc has raised $1.2 billion from mutual funds and other investors in a funding round valuing the fast-growing rides-on-demand service at $18.2 billion, one of the highest valuations ever for a Silicon Valley startup. Uber Chief Executive Officer Travis Kalanick announced the funding round on Uber’s blog Friday. The funding, eclipsed only by the likes of Facebook Inc before it went public, is a vote of confidence by investors in four-year-old Uber’s growth potential. “Uber is one of the most rapidly growing companies ever, and we believe there are opportunities for continued tremendous growth,” Joan Miller, a spokeswoman for Summit Partners, an investor in the funding round, said by telephone. Investors hope the company, which allows users to summon a ride on their smartphones, can expand globally and diversify into logistics.