Uber warning: Lyft raises $1B from big new ally Alphabet
san francisco — Lyft raised $1 billion in a deal that values the ridesharing startup at $11 billion, steps up competition with rival Uber Technologies and builds ties with internet giant Alphabet.
The new money will help Lyft doubling down on the US market, where it has made gains against Uber but still lags its rival. Alphabet’s growth investment arm, CapitalG, led the round, and David Lawee, a partner at CapitalG, will join Lyft’s board, the startup said in a blog.
The funding marks a major shift in Alphabet’s allegiances away from Uber, and suggests a tighter pairing of its Waymo autonomous vehicle technology with Lyft’s transportation network.
Lyft has gained market share in the US this year as Uber suffered from executive turnover and selfinflicted wounds, including a protest over the company’s ties to the Trump administration. Lyft seized the moment, donating to the American Civil Liberties Union and issuing a string of progressive political statements.
Bloomberg previously reported Alphabet was considering a $1 billion investment. The internet giant was a major Uber backer, but the companies have clashed over autonomous vehicle technology this year. The funding is bad news for Uber, which is trying to finalise a major investment from SoftBank Group. Even if the SoftBank deal goes through as expected, a wellfinanced Lyft is a blow for new Uber CEO Dara Khosrowshahi. On paper, Uber remains the far more valuable company. It was last valued at nearly $70 billion.
Over the past few years, Uber and Lyft have poured money into subsidies and other short-term stimulants of market share growth. Both firms have looked for more sustainable means of outmaneuvering each other. The new financing may reignite the subsidy wars or it could usher in a new era of responsible, albeit well-funded, competition.
GV, another Alphabet investment arm focused on venture capital, co-led a more than $250 million investment in Uber in 2013. David Drummond, Alphabet’s chief legal officer, took a board seat. But the relationship fractured as Uber started working on selfdriving cars in competition with Waymo. Alphabet sued Uber for stealing its autonomous vehicle trade secrets in a highly-publicised case set to go to court in December. —