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

Alphabet leads $1 billion investment in Lyft, but is GM on the way out?

USA ridesharing giant Lyft Inc on Thursday announced it has received a US$1 billion investment led by the venture arm of Google parent Alphabet Inc to help ramp up its challenge to market leader Uber Technologies Inc.

Alphabet, which is based in Mountain View, California, has also emerged as a thorn in Uber's side, even though Google was among Uber's early investors and still holds a stake in the company.

Lyft has had talks with investment banks about an initial public offering next year, according to two people briefed on the discussions, who asked to remain anonymous because the conversations are confidential.

The cash-injection from Google's parent firm puts pressure on market leader Uber, which is fighting Transport for London's (TfL) decision to deny it a new operating licence in the capital.

Lyft is still far smaller and worth far less than Uber, another privately held company based in San Francisco whose investors have valued it at almost $70 billion.

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Uber's valuation, which is close to $70 billion, still dwarfs Lyft's. The news about the fresh round of investments was revealed by Lyft in a blog post.

Uber has appointed a new chief, Dara Khosrowshahi, and is now trying to learn from its missteps while pursuing his goal of taking the company public in the next 18-36 months. Uber has been valued at as much as $70bn. However, the relationship between the two companies started as far back as May of this year. The new financing may reignite the subsidy wars or it could usher in a new era of responsible, albeit well-funded, competition.

Lyft and Alphabet already have a relationship through a partnership Lyft struck with Waymo, Alphabet's self-driving auto unit, in May. Shortly after Drummond stepped down, Google's mapping service, Waze, began to expand a carpooling program that could eventually draw riders away from Uber. Alphabet sued Uber for stealing its autonomous vehicle trade secrets in a highly publicised case set to go to court in December. Where GV focuses on early-stage funding, CapitalG typically invests in late-stage companies such as Airbnb, Stripe and Snap Inc.

Japanese telecom company SoftBank has been known to invest similarly. Those startups turned into the dominant players in their industries and countries.

A driver displaying Lyft and Uber stickers on his front windshield drops off a customer in downtown Los Angeles. But this year, Lyft has closed the valuation and market-share gap. Lyft has also flirted with worldwide expansion, while Uber already operates in more than 70 countries.

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