Economy

Google owner Alphabet leads $1bn funding round for Uber rival Lyft

Google owner Alphabet leads $1bn funding round for Uber rival Lyft

To bolster itself ahead of any public offering, Lyft on Thursday said it had raised $1 billion in financing led by CapitalG, a venture investment arm of Google's corporate parent, Alphabet. It was last valued at almost $70 billion.

Lyft is tight-lipped as to what, precisely, the new funding will be spent on. The fact remains that less than 0.5% of miles traveled in the U.S. happen on rideshare networks. "This creates a huge opportunity to best serve our cities' economic, environmental, and social futures".

Alphabet's funding boost will help Lyft step up its challenge just as Uber faces up to the potential loss of its London licence. Earlier this month, Lyft completed its 500 millionth ride with the service now available to 95% of the USA population - up from 54% at the beginning of the year.

There's a long history of technology companies investing in the next generation of upstarts. In 2014, it sent a fact-finding mission to the United Kingdom, "exploring opportunities in London and meeting with an array of political leaders and policymakers". This has placed the transport network with more formidable momentum to keep competing with Uber, which has scared the older company enough that it actually got into trouble with the Federal Bureau of Investigation for corporate espionage activities against Lyft. 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.

Lyft made the announcement today via blog post, with the money coming from Alphabet's VC arm, CapitalG.

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However, investors can't deny the different paths these two rivals took over the previous year. On paper, Uber remains the far more valuable company. That company is integrated into a number of Google products and services, from Google Assistant to Google Maps.

Lyft, which runs a distant second to Uber and is only based in the United States, has pushed expansion this year.

The new investment also means that the company becomes a formidable partner of Google's sister company Alphabet.

Uber has itself been developing self-driving vehicle technology, going so far as to effectively acquire an entire robotics department at Carnegie Mellon University. This began in the month of June when Travis Kalanick was ejected as the chief executive of the company.

The investors in that round included KKR, Baillie Gifford, Alliance Bernstein, Canada's Public Sector Pension Investment Board (PSP) along with Rakuten and Janus Capital.