Updated 3:39 pm, Thursday, October 19, 2017
In a move that escalates the ride-hailing wars, Lyft said Thursday it has raised $1 billion in new financing led by CapitalG, the venture investment arm of Alphabet.
The funding values Lyft at $10 billion before the introduction of new capital. That is a significant jump from the San Francisco 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, the parent company of Google, as well as a healthy influx of cash to inject into its business. 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 for others to also put their money in.
“Less than 0.5 percent of miles traveled in the U.S. happen on rideshare 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. Lyft has drafted off a series of high-profile stumbles that rival Uber has undergone this year. Uber is dealing with at least five federal inquiries into its business practices. A group of investors also forced out Travis Kalanick, Uber’s co-founder and former chief executive, this year after concerns that he was not fit to lead the company.
Uber, which has since appointed a new CEO, is trying to turn around its corporate culture while nearing a deal to sell a significant stake of itself to SoftBank, a Japanese conglomerate, which would include about $1 billion in new capital.
The allegiances of investors in the ride-hailing industry are murky. SoftBank is also a major investor in Didi, a ride-hailing company that was once a major competitor to Uber in China. Didi is also 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 that is owned by Alphabet. Waymo has accused Uber of stealing trade secrets through 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 startups that are working together to build software for autonomous vehicles. That group includes partners such as General Motors, Ford and Nutonomy, as well as Alphabet’s Waymo.
“Ridesharing is still in its early days,” Lawee, a partner at CapitalG, said in a statement. “We look forward to seeing Lyft continue its impressive growth.”
Mike Isaac and Katie Benner are New York Times writers.