21 April 2017

Lyft obtains funding from KKR

Last week, Lyft successfully raised USD 600 million from private equity giant KKR in its seventh funding round, amid speculation that the taxi booking application (app) provider may go public in the near future. The deal values the technology company at USD 7,500 million, according to various media reports.  

Commenting on the fundraising, KKR’s co-founder George Roberts said: “With ridesharing increasingly in high demand, we are proud to partner with Lyft for their differentiated customer-centric culture, impressive growth strategy and exceptional management team, and to work together to change transportation for the better for both passengers and drivers.”

There are reasons to be optimistic about Lyft. While the company’s finances are still in the red, it saw a 250.0 per cent bump in revenue last year and aims to be profitable by 2018, according to people familiar with the matter, as cited by Bloomberg. Additionally, more US consumers are choosing Lyft over its bigger rival Uber this month compared to last September, Quartz Media reported.

Perhaps to Lyft’s benefit, it has not been an easy year for Uber so far. The San Francisco-headquartered company has been accused of attempting to profit from a taxi driver strike in January at John F Kennedy Airport. The protest was held in response to President Donald Trump’s move to ban immigrants and refugees. Uber faced backlash as a result, with #DeleteUber trending on social media, urging users of the app to remove their accounts.

About two months ago, Travis Kalanick was under fire over a viral video showing a heated argument between the Uber chief executive and one of his company’s drivers. Kalanick issued an apology shortly after the incident as the bad publicity weighed on his company. Allegations from former Uber employee Susan Fowler of sexual harassment during working hours might have also dented the firm’s reputation.

According to Zephyr, the M&A database published by Bureau van Dijk, Lyft has raised a total of around USD 2,778 million (including KKR’s recent investment) since 2014. The subscribers include big names like China’s Alibaba.com, Tokyo-based Rakuten, as well as private equity group Fortress Investment.

Lyft has been ramping up efforts to enhance its technology. Last month, it acquired FinitePaths, which operated an app that helped users get answers and make decisions using social, local and contextual signals. This led to the shutdown of the San Jose-based target, with its team subsequently joining Lyft. Other acquisitions by the ride-hailing company in recent years are transportation app developer Corral Labs in 2014 and group chat platform Leo Me in 2015.

© Zephyr