Morning Report: As expected, Lyft has raised $500 million more by extending its recent capital event.
In August, we wondered aloud at the “The Staggeringly Large Global Bet On Ridesharing” which, at that moment, was potentially growing by over $1 billion. We repeat the comment today as we have news of even more capital piling into the ridesharing market, this time into Lyft’s pockets.
Today, we’re announcing that our most recent round of funding has been increased from $1 billion of new capital to $1.5 billion. This financing, led by CapitalG, will bring Lyft’s post-money valuation to $11.5 billion.
The backdrop to the Lyft Series Whatever extension is, of course, the Softbank-Uber deal that is currently underway—but not done for certain. It would be a material reversal of events if Lyft closed its new funds, as it has, and Uber’s deal fell apart. That would leave Uber without new capital, cashed-out employees and early investors, and more. Lyft, in contrast, has already shifted into gear.
But instead of bogging down in the Uber story, let’s remind ourselves about Lyft’s financials. Earlier this quarter, numbers leaked out, providing us with a clearer picture of where Lyft is today. From our piece:
But before we talk about now and tomorrow, Bergen and Newcomer report that Lyft lost $606 million against $708 million in net revenue in 2016. Net revenue represents the company’s cut of fares, making it far smaller than the firm’s gross merchandise volume (or ridesharing equivalent metric).
From there, we turn to 2017. According to the duo, Lyft will bring in around $1.5 billion in net revenue this year, a more-than-doubling of its prior-year result. The firm was tipped to reduce its pace of losses on a dollar basis in 2017, but that appears to be no longer the case. Instead of lowering its (presumably adjusted) losses to $400 million, Lyft’s investors “are now predicting losses of close to $600 million in 2017, two people” told Bloomberg.
That $500 million more that Lyft just raised is therefore material against its pace of loss. (Uber’s loss rate is higher, meaning that it gets fewer miles to the billion.) With the full, new $1.5 billion, Lyft has quite a lot of runway to drive down before it needs to tap the brakes.
That’s all the stuff that matters today. But behind the scenes, the self-driving race is afoot. Whomever is the first across that particular finish line will have the chance to shake up the then-extant ridesharing market. All we’ve learned today is that Lyft’s chances of being a contender for that particular pole position went up.
(Oh and one more thing. Guess which Uber investor just dumped money into Lyft?)
From The Crunchbase Daily:
- A cursory glance at tech headlines may have you believe that the software-as-a-service (SaaS) business is humming along nicely. And for the most part, it is. However, some see trouble afoot for the market’s younger companies, with declining investment at the earliest stages. Similar issues may be plaguing mobile app startups as well, a Crunchbase News analysis finds.
- Intuit is acquiring TSheets, a provider of time-tracking tools for employees, for $340 million in cash, with plans to incorporate the app into the QuickBooks platform. Eagle, Idaho-based TSheets, founded in 2006, previously raised $15 million in growth funding, after operating for nearly a decade without outside investment.
- Lyft has raised an additional $500 million for its latest funding round, bringing the total to $1.5 billion. The round, which now includes backing from Fidelity and the Ontario Teachers’ Pension Plan, sets a post-money valuation of $11.5 billion for the ride-hailing company.
- Los Angeles-based seed investor CrossCut Ventures has raised $125 million for a fourth fund that will focus on startups in the region.