The US ride-hailing company Lyft has secured a $1bn (£760m) investment from a Google-led consortium, a considerable war chest that will help finance its challenge to Uber in the US – and possibly overseas.
The funding round was led by CapitalG (formerly known as Google Capital), the strategic investment arm of Google’s corporate parent Alphabet, and takes the valuation of Lyft up to $11bn.
That’s still a fraction of Uber’s market cap, which is somewhere between $50bn and $70bn, but it pegs the company as a major domestic competitor to the trouble-stricken cab firm.
Lyft is tight-lipped as to what, precisely, the new funding will be spent on. In a statement announcing the investment round, the company said: “While we’ve made progress towards our vision, we’re most excited about what lies ahead. The fact remains that less than 0.5% of miles traveled in the US happen on rideshare networks. This creates a huge opportunity to best serve our cities’ economic, environmental, and social futures.”
Where Uber has expanded rapidly internationally – it currently operates in 84 countries – Lyft has remained steadfastly local. All its operations are focused in the US, where it says it is available to 95% of the population, “up from 54% at the beginning of the year”.
But the company has long been eyeing international expansion. In 2014, it sent a fact-finding mission to the UK, “exploring opportunities in London and meeting with an array of political leaders and policymakers”. Nothing came of the meeting, but the company restarted conversations during the last year, in the period leading up to Transport for London’s bombshell ruling declaring Uber not fit and proper to hold a private hire license.
While in the UK, Lyft executives met TfL, according to details published by the agency in response to a freedom of information request. Four TfL officials met two Lyft executives – the company’s chief strategy officer and its director of international government relations – in December 2016, before having multiple follow-up conversations remotely over the next couple of months and a second face-to-face meeting in New York in March.
“We regularly talk to companies around the world about innovation that could improve transport in London,” Michael Hurwitz, TfL director of transport innovation, said in a statement in September.
Alphabet soup
Alphabet’s side of the investment leaves the company even further entwined in the automotive market. The company already has a substantial stake in Uber, the result of an investment made through its Google Ventures (GV) subsidiary. That company is integrated into a number of Google products and services, from Google Assistant to Google Maps.
But while the stake in Uber is worth a lot more than the stake in Lyft, the two companies have an increasingly frosty relationship, based largely on a fractious court case concerning stolen self-driving car technology.
Alphabet subsidiary Waymo, one of the leaders in autonomous vehicle technology, sued Uber in February this year, alleging that a former Waymo employee, Anthony Levandowski, had taken trade secrets with him when he quit the firm to start his own self-driving truck company that was subsequently bought by Uber.
Uber has itself been developing self-driving car technology, going so far as to effectively acquire an entire robotics department at Carnegie Mellon University. Former chief executive Travis Kalanick has spoken out about automation being an existential issue for the firm, since he believes that the first ridesharing company to acquire workable self-driving technology will be able to undercut its competitors and gain a rapid monopoly.
Lyft seems to agree: in July, the company launched its own self-driving division, building an “open platform” in the hope that other companies developing AV technology would offer their cars for hire on Lyft’s service.
