Lyft Raises $250 Million From Coatue, Alibaba and Third Point
Lyft, which helps people hail rides from drivers outside the bounds of normal taxi systems, has raised $250 million in Series D funding to finance the expansion into new markets including New York and outside the United States.
It’s a round we’d previously reported on at a lower amount when the first round of documents were filed.
What’s now interesting is where the money came from: The hedge fund manager Coatue, as we previously reported, as well as activist investor Dan Loeb’s Third Point; and the Chinese e-commerce giant Alibaba, which started a U.S.-based investment group last year whose other picks include shipping service ShopRunner and app search startup Quixey.
Previous investors Andreessen Horowitz, Founders Fund and Mayfield also participated.
Earlier in the round the pre-money valuation for Lyft had been $700 million. The company had been aiming to be in the billion-dollar valuation club with many other hot, fast-growing startups.
The No. 1 player in the transportation app space is Uber, which finagled a $3.5 billion valuation last year.
But Lyft stands out from Uber, said Lyft co-founder and president John Zimmer, because of the “peer-to-peer nature of the business” and the “experience and community.”
The company’s motto is “your friend with a car” and it encourages drivers to festoon their cars with fuzzy pink mustaches and greet riders with fist bumps.
In a conversation at Lyft’s jam-packed San Francisco headquarters, Zimmer portrayed Uber as a taxi and black car alternative, claiming that even UberX drivers tend to be affiliated with professional fleets. By contrast, he said, Lyft tends to be something that actors and artists do for a few hours a week to help support themselves.
It’s hard to say if those characterizations are true, as there’s no established outside research on the composition of the fast-changing ride-sharing space.
But one thing’s for sure: Competing in this business isn’t cheap. According to Zimmer, launching Lyft in a new city costs at least hundreds of thousands of dollars, and in some cases, much more than that — like in one of Lyft’s next targets, New York City.
Lyft now operates in 30 markets, up from two a year ago. It has 240 employees, plus armies of contractor drivers in those cities. It faces regulatory battles in many places. Right now the spiciest one is in Seattle, which is capping the number of Lyft drivers allowed on the road at any one time.
Recent key Lyft hires include Chris Pouliot, VP of data science, who was previously at Netflix and Google. He’s working to try to improve Lyft’s often inaccurate arrival time estimates. There’s also David Estrada, VP of government relations, who previously worked on legalizing self-driving cars for Google X, as well as Krish Srinivasan, VP of finance, who was previously CFO of Amazon India and Amazon Japan.
Lyft’s core leadership consists of co-founder Zimmer, CEO Logan Green and COO Travis VanderZanden, previously of Cherry and Yammer.