Lyft announced an impressive new funding round of $1 billion led by CapitalG, Google’s venture arm. The latest cash infusion values the ride-hailing service at $11 billion, the company announced. As part of the deal, CapitalG Partner David Lawee will be joining Lyft’s board.
The financing news comes at a time when Lyft continues to profit off of the stumbles of its primary rival, Uber. In July, it was reported that Lyft’s gross bookings, the revenue earned by its drivers, grew by about 25 percent to $1 billion in the second quarter of 2016 from $800 million in the previous period. That’s a faster growth rate than Uber.
Earlier this month, Lyft said that it had completed its 500 millionth ride, and was available to 95 percent of the US population — up from 54 percent at the beginning of the year. The company also recently announced that it would go beyond partnering with other companies on autonomous driving, and start building some of the technology itself.
The fact that the funding round was led by CapitalG, a unit of Alphabet formerly known as Google Capital (not to be confused with GV, formerly Google Ventures, which is a separate thing) is also interesting. Google, through GV, was an early investor in Uber, pumping $258 million in the still-nascent ride-hail service in 2013. That investment was widely seen as a smashing success, gaining about 14 times its value over the next three years to more than $3.5 billion.
But since then, the relationship between Google and Uber has soured. Earlier this year, Waymo, the self-driving unit of Alphabet, sued Uber for theft of its trade secrets, alleging that one of its top engineers stole tens of thousands of pages of documents before leaving to start his own company that was subsequently acquired by Uber. Waymo, which has a self-driving partnership with Lyft, is reportedly seeking $1 billion in settlement cash.
There’s no doubt that Uber’s misfortunes have been a blessing for Lyft, but the company is still a fraction of the size of Uber. Earlier this year, Uber announced its own milestone of reaching 5 billion rides cumulatively. No matter how you shake it, Uber is just way bigger than Lyft, and that’s reflected in its dominating grip on the ride-hailing marketshare (77 percent as of May), and its status as a global company (Lyft only operates in the US).
In a blog post, Lyft says the new money will help not only its business, but the ride-sharing industry as a whole. “The fact remains that less than 0.5 percent of miles traveled in the US happen on rideshare networks,” the company says. “This creates a huge opportunity to best serve our cities’ economic, environmental, and social futures.”