Lyft has officially closed a huge, $250 million round of funding that it will use to aggressively expand its on-demand ride-sharing service in the U.S. and internationally.
The Series D round of financing, which will put its war chest on par with arch-competitor Uber, comes from hedge fund Coatue Management, Chinese e-commerce giant Alibaba, and Daniel Loeb’s Third Point, in addition to existing investors Andreessen Horowitz, Founders Fund, and Mayfield Ventures.
The financing leaves Lyft well-capitalized to compete with rival on-demand transportation service Uber, which raised $258 million last August. With the latest financing, Lyft has brought on more than $330 million in outside funding since it began as carpooling startup Zimride in 2007.
The bulk of that money has been raised in just the past 18 months since the launch of Lyft in San Francisco. That includes a $15 million round of funding led by Founders Fund and a $60 million round led by Andreessen Horowitz less than a year ago.
And that doesn’t even count the money it made from the sale of its Zimride business to Enterprise Holdings last summer.
“We’ve always been focused on the experience for both drivers and passengers, and this [funding] continues to make that the focus,” Lyft president John Zimmer told me in a phone conversation. “The amount of capital [raised] isn’t the focus and isn’t going to be a differentiator.”
More Than Expected
The announcement of the funding round was largely expected, especially after a Delaware filing confirmed Lyft had raised $150 million. What’s a bit surprising was the total amount raised and the investors involved.
We reported in February that Coatue was likely to invest in the round, after previously putting money into later stage startups such as Box, Snapchat and HotelTonight. Alibaba and Third Point hadn’t previously been reported as potential investors in the company, however.
Well not only did Lyft bring in the full $150 million, but it continued to raise more, based on a trio of filings that we’ve received from data provider VC Experts. Those filings, dated March 14, March 21, and March 28, end with Lyft having sold 24,674,543 shares of Series D stock at $10.1319 per share.
Expanding In The US And Beyond
With plenty of money in the bank, Lyft is set to continue its aggressive expansion plans. This time last year, the company had launched in just two cities — its home market of San Francisco and Los Angeles.
Lyft has expanded plenty since then, now with service in 30 cities throughout the country. Its staff has also grown significantly, going from 30 employees at the beginning of last year to about 240 today.
The new funding will allow Lyft to accelerate its growth plans in both the U.S. and abroad. And its personnel will soon be moving to a big new headquarters in San Francisco’s Mission district.
“The rate at which we’re growing is very rapid, and we needed capital to be able to expand as quickly as possible,” Zimmer said. “There are communities of people all over the U.S. that want to see Lyft in their town.”
While Lyft has been rapidly adding new markets, not all governments and regulators are happy about the new transportation services emerging in their cities.
In Seattle, for instance, the local city council passed an ordinance that would limit the number of drivers that Lyft and other ride-sharing service providers could have on the road. Lyft, Uber, and others are seeking to have the ordinance overturned with a referendum campaign that would hopefully put the issue to a citywide vote.
To combat pushback from other local regulators and city governments, Lyft has been working to improve its government relations team with the hiring of former Google X legal director David Estrada. It’s also created a ride-share insurance coalition and announced plans to introduce coverage for drivers that would close the so-called “insurance gap” that happens between rides.
While pushing ahead into new markets, Zimmer said that Lyft would still “be thoughtful and will try to work together with every city” that it enters. But with the momentum of 30 markets already, the company has no plans to slow down expansion anytime soon.