Google Parent Making Humongous Bet On Lyft

Javier Stokes
October 20, 2017

Lyft also points out in its blog post that less than 0.5% of the US population actually uses ride-sharing services, meaning that room for growth is substantial.

Alphabet's CapitalG investment fund will spearhead the funding, which will value Lyft at $11 billion, Lyft wrote in a blog post on Thursday. Waymo, Alphabet's self-driving auto division, has been working with Lyft on an autonomous vehicle pilot program.

The investment from Alphabet could provide a boost to Lyft as its battles Uber for market share in the US and would also enable Lyft to ensure its independence for the near future. Lyft seized the moment, donating to the American Civil Liberties Union and issuing a string of progressive political statements.

The new investment creates a potential conflict for Alphabet, which was one of the early investors in Uber.

Lyft has been expanding in the United States market as Uber's image has taken a hit in recent months. On paper, Uber remains the far more valuable company.

Those obstacles have taken their toll: while Uber has been valued as high as $70 billion, that number could fluctuate pending an investment deal with SoftBank, the Japanese conglomerate that's been eying a major stake in Uber.

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Over the past few years, Uber and Lyft have poured money into subsidies and other short-term stimulants of market share growth. The new financing may reignite the subsidy wars or it could usher in a new era of responsible, albeit well-funded, competition.

Alphabet also has ties to Uber through its second investment arm, GV. Lyft didn't disclose how much of that $1 billion was funded by CapitalG, whose partner David Lawee will join Lyft's board. But the relationship fractured as Uber started working on self-driving cars in competition with Waymo. Those startups turned into the dominant players in their industries and countries. Lyft last week said that its drivers will use Google Maps for in-app navigation.

Uber mulled acquiring Lyft back in 2014.

Uber, which has a valuation of almost $70 billion, is widely expected to seal a deal for a major investment from Japan's Softbank, which could allow some stakeholders to cash out. Lyft's new capital infusion follows a $600 million funding round in April.

Both companies are betting the ride-hailing market will continue to expand dramatically and move beyond the largest cities by weaving itself into the transportation fabric of America's heartland.

What's also interesting about this deal is that CapitalG was a backer for Uber early on in the company's life.

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