10.19.2017 NY Times
Lyft Is Said to Explore I.P.O. as It Raises $1 Billion Led by Alphabet
In an escalation of its ride-hailing war against Uber, Lyft has begun to explore going public in 2018 and is trying to strengthen its position by raising more capital, including $1 billion in new financing led by an investment arm of Google’s parent company.
Lyft has had talks with investment banks about an initial public offering next year, according to two people briefed on the discussions, who asked to remain anonymous because the conversations are confidential. Lyft has not decided which bank may become its lead underwriter for an I.P.O., the people said.
To bolster itself ahead of any public offering, Lyft on Thursday said it had raised $1 billion in financing led by CapitalG, a venture investment arm of Google’s corporate parent, Alphabet. The funding values Lyft at $10 billion before the introduction of new capital — a significant jump from the company’s last valuation of $6.9 billion.
The new investment further complicates the convoluted web of financial relationships in the ride-hailing industry, where companies like Lyft and Uber have hauled in enormous amounts of funding from firms that often put money into competing companies.
But the financing also gives Lyft a new and formidable partner in Alphabet. As part of the deal, David Lawee, a venture partner at CapitalG, will take a seat on Lyft’s board of directors. The investment round, which includes other undisclosed participants, remains open.
“Less than 0.5 percent of miles traveled in the U.S. happen on ride-share networks,” John Zimmer, president of Lyft, said in a statement announcing the deal. “This creates a huge opportunity to best serve our cities’ economic, environmental, and social futures.”
Alphabet’s investment ratchets up the high-stakes battle for supremacy in the ride-hailing industry.
Uber, which is valued at nearly $70 billion and is the industry’s dominant force, has been grappling with scandals over its corporate culture and business practices. A group of investors forced out Travis Kalanick, Uber’s co-founder and former chief executive, earlier this year over concerns that he was not fit to lead the company. Uber has appointed a new chief, Dara Khosrowshahi, and is now trying to learn from its missteps while pursuing his goal of taking the company public in the next 18 to 36 months. It is nearing a deal to sell a significant stake of itself to SoftBank, a Japanese conglomerate, which would include about $1 billion in new capital.
Lyft has benefited from Uber’s series of high-profile stumbles in recent months to lift its own profile. The two companies are locked in something of a race for which can go public first; whichever company does will most likely set a benchmark for Wall Street for the valuation of a public ride-hailing company.
Investors trying to position themselves for the best returns have put money into competing entities, creating murky allegiances.
SoftBank, for example, is also a major investor in Didi, a ride-hailing company that was once a major competitor to Uber in China and is itself an investor in Lyft. And CapitalG is a sister company to GV, formerly known as Google Ventures, which is a major investor in Uber.
Those relationships are further complicated by how Uber is dealing with a lawsuit filed by Waymo, the self-driving car unit owned by Alphabet. Waymo has accused Uber of stealing trade secrets after it hired a former Google employee.
Lyft must also balance a delicate relationship between itself and a group of technology partners who are working with it on self-driving technology. In July, Lyft unveiled a large Silicon Valley headquarters for its Open Platform Initiative, a coalition of automakers and technology start-ups that are working together on software for autonomous vehicles. That group includes General Motors, Ford and Nutonomy, as well as Waymo.
“Ride-sharing is still in its early days,” Mr. Lawee, a partner at CapitalG, said in a statement. “We look forward to seeing Lyft continue its impressive growth.”