A Lyft driver places one of the company’s beacons on his dashboard in January. (Kelly Sullivan / Getty Images for Lyft)
Lyft Inc., the San Francisco-based ride-hailing company, said it has closed a $600 million round of financing, valuing the company at $7.5 billion.
New Lyft investors include private equity firm KKR & Co., asset management firms Baillie Gifford and AllianceBernstein LP and the Canadian pension fund PSP Investments, the company told Bloomberg News.
Lyft, first known for its pink-mustachioed cars, last raised $1 billion at a $5.5 billion valuation in a December 2015 round led by General Motors. This latest funding round includes existing investors Rakuten Inc. and Janus Capital Group Inc.
Lyft is tapping a set of investors who frequently back public companies or provide funding just ahead of an initial public offering. The company has been quiet about the timing of an IPO, but investors in Lyft and Uber Technologies have long speculated that Lyft would be smart to try to enter the public market before its much larger competitor. One Uber investor compared the dynamic to the Chinese e-commerce companies Alibaba Group Holding and JD.com. Once the smaller JD.com went public, Alibaba soon followed.
"Lyft is fundamentally changing the way people think about car ownership and transportation," George Roberts, co-chief executive officer of KKR, said in a emailed statement. "With ride sharing 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."
Lyft has benefited from several dramatic stumbles on the part of its archrival, Uber, so far this year.
#DeleteUber, which trended at the end of January because of the company’s reaction to President Donald Trump’s first immigrant travel ban, led hundreds of thousands of people to remove the app in a week. Lyft said it experienced a 60 percent increase in new passengers in the week following the #DeleteUber campaign.
In the first three months of 2017, Lyft generated a 34 percent increase in rides to 70.4 million compared with the number at the end of 2016 and 142 percent rise from the period a year earlier.
The number of U.S. consumers who said they would consider taking Lyft has jumped to 9.6 percent this month from 5.6 percent in September, according to a report compiled by the market research firm YouGov BrandIndex for Quartz. Meanwhile, the number of U.S. consumers who said they would consider taking Uber fell to 14 percent from 18 percent in November.
Lyft lost about $600 million on $700 million in revenue in 2016, people familiar with the matter told Bloomberg in January. While Lyft has said it wants to reduce its losses, the company has continued to raise money to sustain its expenses, including offering discounted rides and paying drivers bonuses to lure them away from Uber.
Lyft only operates in the U.S., though the company has long teased that it would consider venturing overseas. Lyft has launched in 100 new U.S. cities already this year.
"We’re working hard bringing Lyft’s mission to life, improving people’s lives with the world’s best transportation," John Zimmer, the ride-hailing company’s co-founder and president, said in the statement. "We have big plans on the horizon, and will continue investing in new technology and hospitality in order to create experiences that passengers and drivers will love."