A US ride-services firm has bolstered its attempts to compete for market share with its fierce and larger rival Uber Technologies Inc. by raising $600m in fresh funding. Lyft which was launched in 2012 - has continued to invest in its growth in order to expand its services. This year, the company has extended its services to 100 new cities.
However, the announcement of Lyft's latest funding round is yet another indication of its clear desire to continue its efforts to wrestle market share in the ride-hailing services industry from its rivals. Lyft is recognized as Uber's No.1 competitor - and some analysts believe now is the opportune time for the organization to increase the pressure on Uber who have endured a number of setbacks in recent months.
It has been disclosed that the $600m raised by Lyft came mostly from large global investment funds rather than startups traditional funding source of venture capital. The latest funding drive now leaves the organization which is headquartered in San Francisco with a valuation of $7.5 billion - which represents a sharp increase from the $5.5 billion valuation at Lyft previous financing round over a year ago.
In January 2016, Lyft raised $1billion and further disclosed that half of it came from automaker General Motors Co. Sources close to Lyft have suggested that the funding total and valuation exceeds previous targets - and added that the company was aiming to raise $500m at a valuation of $6billion to $7 billion.
The latest round of funding by Lyft has seen previous investors such as Japanese internet company Rakutan Inc. and investment fund Janus Capital Group Inc. to reinvest in the firm. In addition to this, first-time Lyft investors included private equity firm KKR & Co - large asset manager Baillie Gifford - and one of Canada's largest pension funds the Public Sector Pension Investment Board.
Analysts have suggested this funding round by Lyft is representative of a broader trend of how pension funds, sovereign wealth funds, family offices and large asset manager that would have traditionally invested in public companies are now putting more money into private tech startups for better returns.
Lyft remains behind Uber in terms of market share in most regions in the country - but the company revealed that it had completed 70.4 million rides - which is an increase of nearly two-and-a-half times from the same period a year ago. However, Uber stated last month that it reached a record number of weekly rides in the US - despite a barrage of criticism and bad press surrounding the company.