Lyft gets a lift with $530 million funding round
The round was led by Japan-based e-commerce giant Rakuten. Lyft says it'll use the cash to expand its operation in the US, among other things.
Ride-hailing service Lyft is now flush with cash as it looks to expand across the US.
Lyft has raised $530 million in a new round of funding led by Japan-based e-commerce giant Rakuten. The new round brings Lyft's total venture investment since its founding in 2012 to more than $860 million. In its announcement Wednesday, Lyft didn't say what valuation its funding round was based on, but The Wall Street Journal, which earlier reported on the news, says the cash infusion came on a valuation of more than $2.5 billion.
Rakuten getting involved in a US-based car-sharing service might seem odd. However, the e-commerce giant has been actively investing in US companies to diversify its portfolio. In 2012, for instance, Rakuten invested in social site Pinterest. According to the Journal, which spoke with Rakuten, the company's investment, part of a broader interest in investing in Silicon Valley startups, will give it 11.9 percent ownership in Lyft.
Like its chief competitor Uber, Lyft provides car-hailing services to riders. The company connects riders and drivers through its mobile app and collects a commission on each ride. The service is perhaps best known for the fuzzy pink mustache people hung on the grill their car to identify themselves as Lyft drivers. In January, the company announced that it will nix these large mustaches in favor of a new version that will glow and sit on the dashboard.
Lyft is rather small compared with Uber. It's available only in the US and has brought its service to just 65 cities. Uber, meanwhile, is available worldwide and is closing in on 300 cities globally. Another competitor, Sidecar, is also available in the US, though it's on the road in only a handful of cities.
Despite being in the same business, Lyft has yet to run into as many troubles as Uber has. In several cities around the world, where local officials want car-sharing services regulated as taxi companies and taxi consortiums see them as threats and want them off the road, none of the services is welcome. But Uber has found itself caught up in the greatest number of legal issues. The company earlier this month stopped its service in Seoul, South Korea, after months of arguments with local officials. It's also been banned in several other locales at one point or another, including New Delhi, India, Portland, Ore.; and all of Spain.
Despite those ongoing issues, Uber has been able to attract boatloads of venture funding from companies that believe it can overcome those woes and grow. In December, for instance, Uber raised $1.2 billion, putting the company's valuation at between $35 billion and $40 billion. Last month, Uber issued a filing with Delaware's secretary of state, saying that it wanted to up its next financing round from $1.8 billion to $2.8 billion.
With its new cash, Lyft says it will expand its "footprint" across the US. Part of that effort will include adding more markets across the country. Lyft says it will also "deepen" its offerings in the markets it's already in.
Lyft will also focus on the company's Lyft Line service, which allows multiple people to share a single ride when they're going to the same area. It's available in New York, Los Angeles and San Francisco, but it will likely be brought to other markets in the coming months. Lyft will also hire more people in a bid to reduce traffic in congested cities.
"We will continue hiring the best talent to develop technology that reduces traffic, takes cars off the road, builds community and improves the economy," the company wrote in a blog post Wednesday. "Our roadmap is exciting, and we look forward to sharing more of it with you in the coming months."
Lyft did not immediately respond to a request for comment.