Okay and then one of the 13 other startups doing this suddenly become able to undercut Uber because they have VCs who are willing to gouge the actual balance sheet in order to put Uber out of business.

Crucially, Uber doesn't own the cars nor the drivers. Anyone willing to throw more cash to drivers and take less cash from riders (with the infusion of VC funding) can instantly steal both the supply and the demand from Uber.

Why would Uber let a competitor undercut them?

Because they have a finite pile of VC cash to burn through.

But one larger than the new entrant.