Lyft Bulks Up With $1 Billion in Funding -- WSJ
October 20 2017 - 02:02AM
Dow Jones News
Valuation rises nearly 50% to $11 billion as ride-hailing
startup speeds after Uber
By Greg Bensinger and Jack Nicas
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 20, 2017).
Lyft Inc. is quietly gaining ground on Uber Technologies Inc.
while its larger crosstown ride-hailing rival has been embroiled in
months of corporate drama and setbacks.
The startup on Thursday said it raised $1 billion in funding led
by a venture-capital fund of Google parent Alphabet Inc., giving
Lyft financial ammunition as it eyes a first-time expansion beyond
the U.S. and broadens its driverless-car efforts. The new
financing, which comes as Uber looks to close a multibillion
investment from SoftBank Group Corp., boosts Lyft's valuation by
nearly 50% to $11 billion.
Over the past year, Lyft has picked up market share in some key
cities while into pushing into dozens of new U.S. markets, driven
in part by carefully-crafted marketing that casts it as the
friendlier alternative to Uber.
Uber, meanwhile, has been beset by a series of troubling events,
including sexual-harassment allegations, the resignation of
longtime chief executive Travis Kalanick, a lawsuit between board
members and several federal probes into its business operations. It
only recently hired a new chief, former Expedia Inc. CEO Dara
Khosrowshahi, who is tasked with filing the company's depleted
executive ranks and is already dealing with a regulatory spat in
London, one of its biggest markets.
Uber is working to nail down a proposed investment from SoftBank
that could total as much as $10 billion, including a direct
investment of as much as $1.25 billion. On Monday at The Wall
Street Journal's WSJD.Live conference, Uber board member Arianna
Huffington said she expects the company will resolve the weekslong
talks within days.
Lyft has raised some $3.6 billion in total funding since
launching under that name in 2012. It is still a distant second to
Uber by valuation and fundraising. Its crosstown rival has raised
about $15 billion in equity and debt and landed a $68 billion
valuation last year while expanding to markets around the
world.
Lyft operates only in the U.S. but has been looking to Canada
and overseas for possible new markets, according to people familiar
with the matter. It has moved into dozens of new cities in its home
country in recent months and met with officials earlier this year
in London, where regulators have said they would revoke Uber's
license to operate -- Uber is appealing. It is expensive for
ride-hailing firms to open in new cities because of marketing
expenses like incentives for new drivers and passengers.
As Uber has fought back the bad-press cycle, Lyft has stayed
largely above the fray. Over the summer it added former Obama
adviser Valerie Jarrett to its board and as part of the funding
round is adding David Lawee -- a partner at Alphabet's CapitalG --
as its 10th director.
Lyft has attempted to capitalize on Uber's reputational problems
with thinly veiled television ads that portray a scheming
competitor that would use spike strips or lasers to take Lyft down.
More recently it enlisted actor Jeff Bridges imploring viewers to
choose their ride "with the right people, doing things for the
right reasons."
The companies are scrambling to take the lead in self-driving
vehicle technology as well. Lyft has joined with companies
including General Motors Co., which is an investor, Ford Motor Co.
and startup NuTonomy, among others, as well as opening its own
Silicon Valley development center. Uber, meanwhile, has mostly
eschewed partnerships in favor of working on its own autonomous
cars, including passenger tests in Pittsburgh, Tempe, Ariz. and
briefly in San Francisco.
With its investment, Google-parent Alphabet pulls closer to Lyft
and gets more say in the ride-hailing company's direction. That
could be useful as Alphabet's Waymo unit plans its own ride-hailing
service with self-driving cars. Waymo sued Uber in February for
allegedly stealing its driverless-car trade secrets to jump-start
its own program. Uber has disputed the allegations.
While Waymo is considered by many to have the world's most
advanced self-driving technology, it knows little about operating a
taxi business. Indeed, Waymo and Lyft said in May they are
collaborating on self-driving technology, including tests of a
self-driving taxi service, a person familiar with the deal said at
the time.
A CapitalG spokesman said the Lyft investment is about making a
profit for Alphabet. "It's a belief in Lyft, their business model,
their future growth and not strategic positioning," the spokesman
said.
CapitalG invests in late-stage companies such as Snap Inc. and
Airbnb Inc., unlike Alphabet's other investment firm GV, which
largely funds younger firms. Alphabet already is an investor in
Uber after GV invested $258 million in the ride-hailing giant in
2013.
The size of CapitalG's investment in Lyft, and how many other
investors are in the round, isn't clear. CapitalG's investments
typically range from $50 million to $100 million.
Write to Greg Bensinger at greg.bensinger@wsj.com and Jack Nicas
at jack.nicas@wsj.com
(END) Dow Jones Newswires
October 20, 2017 02:47 ET (06:47 GMT)
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