Uber spins out Postmates’ robot delivery division into a separate company

Uber had acquired Postmates in July 2020 in a $2.65 billion all-stock deal in a bid to expand its food delivery market share when the Covid-19 put a brake on its ride-sharing service.

Robotics division of Uber's Postmates spins out into new company (AP Photo/Seth Wenig, File) (AP)

Uber is carving out a new startup called Serve Robotics from Postmates' autonomous delivery unit. Uber had acquired Postmates, a food delivery service provider, for $2.65 billion in 2020.

According to a TechCrunch report, Serve Robotics has raised capital through Series A funding led by venture capital firm Neo. Uber has also invested in the startup. The company is said to have lent $50 million. Other investors in the startup are Western Technology Investment, Scott Banister, Farhad Mohit, Lee Jacobs and Cyan Banister's Long Journey Ventures, and Postmates co-founders Bastian Lehmann and Sean Plaice, added the report.

The report reveals that the Serve Robotics name is inspired by the autonomous sidewalk delivery robot developed by Postmates X. The new venture will be spearheaded by Ali Kashani, who also led the Postmates X division. It has two more co-founders – Dmitry Demeshchuk and MJ Chun. The startup will kick off operations with bases in Vancouver and Los Angeles. It has 60 employees at the moment.

Uber's decision to spin out a new startup is said to be part of its efforts to push towards profitability. According to Uber, the company aims to return to profitability by the 2021-end.

The company took some serious cost-cutting measures throughout 2020, especially after the Covid-19 pandemic dealt a devasting blow to its business worldwide. At the end of last year, Uber sold its ambitious self-driving unit. The company also offloaded its air taxi service. It has also been reducing staff in some divisions. For instance, it had laid off 185 employees at Postmates. In May last year, it had said it would lay off 3,700 employees. Chief Executive Officer Dara Khosrowshahi said he would forgo his base salary for the remainder of the year.

Last month, the company posted a narrower loss as its ride-hail and delivery businesses saw a rebound. The company reported a loss on an adjusted basis before interest, taxes, depreciation and amortisation of $454 million, much lower than analysts' average estimates of a $514 million dip.