United States ridesharing giant Lyft announced Thursday it has received a $1 billion investment led by the venture arm of Google parent Alphabet, to help ramp up its challenge to market leader Uber. The Chinese ride-hailing incumbent, Didi Chuxing, also previously partnered with Lyft before buying Uber's China business. The firm has not made a decision on the bank which will become their main underwriter come to the IPO.
The investment from Alphabet fund CapitalG bolsters Lyft's valuation to $11 billion (£8 billion) from $7.5 billion (£5.7 billion).
In September, we found out that Alphabet was possibly about to invest in the ride-hailing company Lyft.
In the continued battle for supremacy between two ride-hailing companies; Uber and Lyft, Lyft seems to take the upper hand.
Lyft is deepening ties to Alphabet despite its partnership with General Motors, which has invested $500 million. As part of the deal, David Lawee, a venture partner at CapitalG, will take a seat on Lyft's board of directors. The investment round is still open and will include other participants. The fact remains that less than 0.5% of miles traveled in the U.S. happen on rideshare networks.
When Lyft was last valued, its value was at $6.9 billion. A group of investors forced out Travis Kalanick, Uber's co-founder and former chief executive, earlier this year over concerns that he was not fit to lead the company.
CapitalG, the investment arm of Alphabet, was formed in 2013 under the name Google Capital.
In 2016, Lyft as well as Uber posted losses.
Lyft has benefited from Uber's series of high-profile stumbles in recent months to lift its own profile.
"We will go public when it's right for us", said Lyft spokeswoman Alexandra LaManna.
Investors trying to position themselves for the best returns have put money into competing entities, creating murky allegiances. This was also around the same time that Uber was ramping its efforts to be the first ride-hailing company to feature driverless cabs. This once-promising partnership went sour once Uber began dabbling in self-driving vehicle tech, essentially intruding on the territory of Waymo. But the relationship fractured as Uber started working on self-driving cars in competition with Waymo.
Google's self-driving vehicle spin-off Waymo is suing Uber in federal court, alleging that it recruited some of its top engineers as part of an elaborate scheme to steal its trade secrets.