Latest Funding Round Values Lyft at $2.5 Billion

Latest Funding Round Values Lyft at $2.5 Billion
Image credit: Lyft

Free Book Preview Money-Smart Solopreneur

This book gives you the essential guide for easy-to-follow tips and strategies to create more financial success.
2 min read
This story originally appeared on Reuters

Ride-sharing service Lyft said it raised an additional $530 million in a funding round led by Japanese online retailer Rakuten Inc, giving the Uber rival a valuation of $2.5 billion and adding momentum to its expansion plans.

The valuation, however, pales by comparison to one of around $40 billion for app-based taxi service Uber.

Rakuten said it is investing $300 million for an 11.9 percent stake in San Francisco-based Lyft - its first investment in a ride-hailing firm. Fortress Investment Group will also be a new investor.

Lyft and Uber, which allow consumers to order rides from their smartphones, have disrupted traditional taxi and limousine services. Uber in particular has expanded rapidly both within and outside the United States.

But they face a number of legal challenges and on Wednesday both companies failed to persuade U.S. judges to rule that their drivers are independent contractors instead of employees, in cases that have wide implications for Silicon Valley "sharing economy" firms.

Asian e-commerce and Internet giants have been particularly active of late in investing in taxi-hailing app firms as well as other well known U.S. tech start-ups.

Japan's SoftBank Corp this year invested 70 billion yen ($580 million) in Travice Inc, the operator of Chinese taxi hailing app Kuaidi Dache. It also poured almost $500 million last year into Southeast Asia's GrabTaxi and Indian app Ola, owned by ANI Technologies.

China's Alibaba Group Holding Ltd is investing $200 million in photo-messaging app Snapchat, a source familiar with the deal said, striking its latest Silicon Valley deal as it builds up mobile services.

Rakuten, controlled by billionaire Hiroshi Mikitani, is also an active investor in start-ups and bought messaging app provider Viber Media Inc for $900 million last year.

($1 = 121.0600 yen)

(Reporting by Teppei Kasai in Tokyo and Shivam Srivastava in Bengaluru; Editing by Edwina Gibbs)

More from Entrepreneur
Our Franchise Advisors will guide you through the entire franchising process, for FREE!
  1. Book a one-on-one session with a Franchise Advisor
  2. Take a survey about your needs & goals
  3. Find your ideal franchise
  4. Learn about that franchise
  5. Meet the franchisor
  6. Receive the best business resources
Entrepreneur Insider members enjoy exclusive access to business resources for just $5/mo:
  • Premium articles, videos, and webinars
  • An ad-free experience
  • A weekly newsletter
  • Bonus: A FREE 1-year Entrepreneur magazine subscription delivered directly to you
Make sure you’re covered for physical injuries or property damage that occur at work by
  • Providing us with basic information about your business
  • Verifying details about your business with one of our specialists
  • Speaking with an agent who is specifically suited to insure your business

Latest on Entrepreneur