Will Lyft be the next mega internet-based success story?
$250 million raised from well-known investors, with previous valuations at $700 million
The ride-sharing company said on Wednesday it had raised $250 million from a group that includes Alibaba Group, a Chinese e-commerce firm, but perhaps most notably the firm garnered an investment from Dan Loeb’s Third Point.
Loeb’s Third Point seldom invests in early stage, venture investments, preferring an activist approach with established firms already trading on public stock exchanges. Loeb was, however, one of the largest early stage investor in Yahoo!
Lyft is a major player in ride-sharing, competing with Uber, which was valued by TPG at $3.5 billion, as reported in the Fortune Magazine.
Lyft and Uber: same goal, very different brand definitions
Lyft and Uber are similar in that they both compete with taxi cabs to ferry customers from one location to the next, but their approach is very different. Uber provides a sophisticated service, picking up customers in luxury vehicles and large SUVs. Lyft, on the other hand, takes a more rock and roll approach to ride-share. When customers enter a Lyft vehicle, which can be identified by its signature pink fuzzy mustache that hangs from the rear view mirror or attached to the front grill of the car, they are greeted with a fist bump, accentuating a hip, young brand.
Lyft has been rapidly growing, operating in 30 cities, up from just two a year ago. The company counts among its investors high profile early stage investment firm Andreessen Horowitz, Founders Fund and Mayfield, all of whom join Coature Management in climbing aboard the bandwagon.
While hopes are high, ride-share could face local challenges
While there is a popular heft to Lyft and other ride sharing programs, they are starting to run into regulatory issues in local markets. In major cities such as Chicago, Boston and New York, for instance, the powerful taxi lobby, which advocates for those who own medallions and control the market, have always held political sway. Lyft and Uber are a challenge to that existing structure that has not gone unnoticed.
“The fight over the future of ridesharing in Chicago is increasingly being waged through shadowy lobbyists,” a WBEZ report noted on February 25. “This has some aldermen concerned about how that could influence the current regulatory debate.” In Boston WBZ noted the problem on the same day. “Boston Police Commissioner William Evans says he wants more public regulation of what he calls ‘gypsy cabs.’ The commissioner on WBZ NewsRadio 1030 last night singled out a popular mobile app Uber, which connects drivers with passengers… Evans questioned the level of safety and security provided by these new app services because they are not subject to the same level of scrutiny as traditional cabs.”