Carl Icahn is known as an activist investor, not a venture capitalist, but when he sees a VC opportunity too good to pass up, he jumps in it. Such is the case with ride-sharing firm Lyft, which according to Icahn is still a relative bargain compared to larger rival Uber.
Lyft announced on Friday that Carl Icahn has taken a $100 million stake in the company. Of note, the investment is officially an extension of a round of funding the start up undertook back in March that values the three-year old firm at close to $2.5 billion.
Statement from Carl Icahn
“If you look at the way the market evaluates Uber and then look at the valuation of Lyft—Lyft is a tremendous bargain,” Mr. Icahn said. “There is room for two.”
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Details on Icahn’s stake in Lyft
Taking a stake in a young start up with a not-fully-proven business model is rare for Carl Icahn, an activist investor known for taking large stakes in public companies. Analysts note the Lyft investment is much smaller than his larger holdings, including multibillion-dollar stakes in Apple Inc., CVR Energy Inc. and eBay as of the end of last year. Carl Icahn also has a stake in controversial nutritional supplement maker Herbalife.
In Icahn, Lyft adds a legendary investor whose name and network wil certainly be a boon for future fundraising, noted Lyft president John Zimmer. “As we look to the future to raise capital, whether it’s next year or whenever, that’s going to be a large validation,” Zimmer said.
As a part of the deal, Jonathan Christodoro, a managing director for Carl Icahn, will become a member of Lyft’s BoD.
Icahn – Andreesen connection
Carl Icahn joins other well-known investors in Lyft, including venture capitalist Marc Andreessen, who he exchanged barbs with last year after taking a stake in eBay, Andreessen is a member of the BoD. Icahn claimed that Andreessen had a conflict of interest because he had invested in several start ups that compete with eBay’s PayPal online bank.
Andreessen defended himself by noting he is recused from board discussions that could involve a conflict of interest.
The spat between the two men became personal. In an interview with CNBC, Icahn said of Andreessen, “he’s screwed more people than Casanova.”
In a separate interview with CNBC, Andreessen said of Icahn, “”Carl just makes stuff up…he lies and he slanders…his inner six-year-old comes out.”
In an emailed statement to the Wall Street Journal regarding Icahn’s new stake in Lyft, Andreessen noted, “All’s fair in love, war and ride-sharing.”
More on Lyft
Lyft undertook a funding round in March led by Japanese firm Rakuten. Carl Icahn’s investment is the largest portion of a $150 million extension to that round. The firm didn’t disclose who bought the other $50 million to the extension.
The ride-sharing company has raised over $1 billion in order to compete with larger rival Uber, which has raised over $5 billion to date. According to WSJ sources, Uber recently briefed investors on developing plans to raise up to another $2 billion. This means Uber’s valuation is on pace to exceed $50 billion.
Uber operates in more than 250 cities across the globe. Lyft operates in 65 cities so far, but only in the United States.