Industry

Lyft’s new $1 bn of cash spells gains over Uber

Lyft is in the valuation elevator. The ride-hailing app on Thursday said it has secured $1 billion of new funding led by an Alphabet fund that boosts its valuation by some 50% to $11 billion.

Uber Technologies, its bigger rival, is struggling to regain momentum and is close to what amounts to a down-round investment from SoftBank. Uber still has greater scale, but Lyft’s less aggressive approach is paying off.

Alphabet’s CapitalG is leading the injection of cash, Lyft said on Thursday. The boost in the company’s valuation from $7.5 billion six months ago speaks to market-share gains as Uber tackles everything from sexual-harassment claims to top management turnover to the potential loss of its London license.

Uber has challenged and even broken laws around the world in its quest for expansion. The attitude has worked in one sense — at its last funding round it tipped the scales at nearly $70 billion. Even with Masayoshi Son’s SoftBank due any day now to invest most of a mooted $10 billion buying shares at a mark closer to $50 billion, Uber is still the elephant of the industry.

But Lyft is showing that its friendlier methods are helping it to keep growing. Uber’s new boss, Dara Khosrowshahi, is adopting the softer approach in, for example, his dealings with London’s transport regulators.

This latest investment might even seem like a transfer of Alphabet’s affections, since another of the tech giant’s funds previously invested in Uber. Lyft, though, has already been working with Alphabet’s Waymo on self-driving cars while Waymo is suing Uber.

The worlds of ride-hailing and driverless-car development are, in any event, incestuous. General Motors, for example, invested $500 million in Lyft in January 2016 and the two agreed to start developing self-driving vehicles. Yet it’s also in talks with Uber about putting autonomous cars on San Francisco’s roads as early next year, according to tech news outlet The Information. Last month Ford struck a similar partnership with Lyft. And so on.

It may all shake out one day, but for now there’s a lot of bet-hedging going on.

The clearest message from the new investment is simply that Lyft is, for the moment, playing the steadier tortoise to Uber’s over-confident hare.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

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Printable version | Jun 2, 2020 2:08:00 AM | https://www.thehindu.com/business/Industry/lyfts-new-1-bn-of-cash-spells-gains-over-uber/article19896918.ece

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