Google parent firm puts down $1B investment on Lyft

Alphabet leads $1bn investment in Uber rival Lyft

Lyft has raised $1 billion in fresh financing, the ride-services company said on Thursday, in a round led by one of Alphabet's investment funds, further complicating the convoluted world of ride-hailing alliances and dealing a blow to rival Uber Technologies.

Lyft will use the new $1 billion funds to double down on the USA market. In conjunction with the funding, CapitalG Partner David Lawee is joining Lyft's Board.

"Ridesharing is still in its early days and we look forward to seeing Lyft continue its impressive growth", Lawee said in a statement. Its announcement this Thursday, October 19, solidified rumors flying about since last month that Google is making overtures to the ride-hailing company, which is now a far distant second to the current industry leader Uber. GM president Dan Ammann told Reuters that any further plans to collaborate with Lyft were "not defined at this time".

Under the partnership, the two companies will align their technology platforms to collect data for research and insights into the various aspects of passenger comfort and safety during a ride in an autonomous vehicle.

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Alphabet's venture arm is also an earlier investor in Uber, but Primack thinks Alphabet could be looking to move away from Uber. GV invested in Uber in 2013, but then Uber began to develop autonomous cars and compete directly with Alphabet. The company accuses former Uber engineer Anthony Levandowski of stealing trade secrets while he was still an employee at Waymo.

Those relationships are further complicated by how Uber is dealing with a lawsuit filed by Waymo, the self-driving vehicle unit that is owned by Alphabet.

Lyft has been growing its cash cushion to take on Uber.

"It is another punch by Alphabet at Uber", said Erik Gordon, an entrepreneurship expert at the University of Michigan's Ross School of Business. Uber has been valued at as much as $70bn. It also claims to have completed its 500 millionth mile. 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. Lyft's losses stood at $600m, but later the company stated that it would become profitable by 2018. The two companies are locked in something of a race for which can go public first; whichever company does will most likely set a benchmark for Wall Street for the valuation of a public ride-hailing company.

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