Lyftoff! Ridesharing Service Lands $250M Funding Round
April 03, 2014
Peer-to-peer ridesharing service Lyft has closed a huge $250 million Series D funding round, which included participation from Coatue Management, Alibaba and Third Point, as well as existing investors Andreessen Horowitz, Founders Fund and Mayfield Ventures. The new capital brings the company's total funding to over $330 million. It most recently received a $60 million Series C investment (led by Andreessen Horowitz) at a valuation of $275 million in May 2013.
Lyft, which a year ago had operations in two cities, now serves 30 cities across the U.S., including San Francisco, Seattle, Boston, Atlanta and Los Angeles. The company plans to use the new funds to expand within the U.S., as well as internationally.
Lyft's enormous financing comes just eight months after Uber, its leading competitor, raised a similar $258 million round (led by Google Ventures). While Lyft's valuation after the latest funding hasn't been confirmed, Uber garnered a cool $3.7 billion valuation with its most recent financing. The two companies continue to lead the way in the ridesharing space but there are definitely other players involved, most notably Sidecar, which recently raised $10 million in funding (led by Union Square Ventures) this past January.
The interesting thing about Lyft and Uber's massive capital infusions and expansion plans is that both companies (and all others in the space) are facing some serious threats in the form of legislation that aims to cripple the operations and growth of such companies. Already in Seattle, an ordinance has been passed that limits the number of drivers that ridesharing services can have on the road at a single time. And with pressure from taxi interests across the country, other cities are looking to limit such services as well.
But money talks, and the fact that so many big-name investors are buying into the ridesharing movement is reason to believe that the sky's the limit. Also, in an effort to counter the legislative pressure, Lyft has hired former Google X legal director David Estrada (who will likely help deal with local governments and regulatory authorities). Uber made a similar move last August by adding Google's chief legal officer David Drummond to its Board of Directors.
As these ridesharing giants expand their services internationally, they just may be surprised by the competition. Several companies abroad have launched similar services, highlighted by Spain-based Cabify, which just closed on $8 million in Series A funding (led by Seaya Ventures) earlier this week.