Lyft picks up $1 billion funding round led by Alphabet's CapitalG

by Harriet Bell October 20, 2017, 0:21
Lyft picks up $1 billion funding round led by Alphabet's CapitalG

Alphabet Inc.'s investment arm, CapitalG, led a $1 billion investment in Lyft Inc. that values it at $11 billion, the ride-sharing startup said Thursday.

It is near an agreement with SoftBank for the Japanese company to invest as much as $10 billion, buying some new stock at the almost $70 billion valuation touted during Uber's last fund-raising but also a larger amount of existing shares at a value closer to $50 billion, according to news reports.

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The new investment creates a potential conflict for Alphabet, which was one of the early investors in Uber. The internet giant was a major Uber backer, but the companies have clashed in court over autonomous vehicle technology this year. CapitalG partner David Lawee will also join Lyft's board as part of the transaction. Google previously invested in Lyft's chief rival, Uber. It was last valued at almost $70 billion.

Alphabet also has ties to Uber through its second investment arm, GV. However, with Uber and Waymo now at each others' necks, the relationship between Uber and Alphabet is likely pretty shaky. But the relationship fractured as Uber started working on self-driving cars in competition with Waymo. SoftBank invested in Alibaba.

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Uber, by comparison, was last valued at $70 billion.

Lyft raised $600 million at a $7.5 billion valuation in April this year, with investment from new partners including Canada's public employee pension fund.

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Both companies are betting the ride-hailing market will continue to expand dramatically and move beyond the largest cities by weaving itself into the transportation fabric of America's heartland. Dara Khosrowshahi rushes to clean up the messes left by his aggressive, rule-bending predecessor Travis Kalanick, he also faces an increasingly formidable challenge in Lyft, the smaller, friendlier ride-sharing upstart that Uber repeatedly tried to sabotage.

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