Ride-services company Lyft has raised US$600 million in fresh funding as it continues to compete fiercely with larger rival Uber Technologies Inc, Reuters reports.
Lyft said on Tuesday it closed the widely anticipated funding round, which had been in progress for weeks.
The US$600 million came mostly from large global investment funds rather than start-ups’ traditional funding source of venture capital. The round values the company at $7.5 billion, a sharp increase from the $5.5 billion valuation at Lyft’s last financing more than a year ago.
In January 2016, Lyft raised $1 billion, half of which came from automaker General Motors Co.
Both the funding total and the valuation exceed previous targets. Last month, a source close to the company said Lyft was aiming to raise $500 million at a valuation of US$6 billion to US$7 billion.
The funding comes from previous investors including Japanese internet company Rakuten Inc. and investment fund Janus Capital Group Inc., and first-time Lyft investors including private equity firm KKR & Co., large asset manager Baillie Gifford, and one of Canada’s largest pension funds, the Public Sector Pension Investment Board.
The funding round is an example of the broader trend of how pension funds, sovereign wealth funds, family offices and large asset managers that have traditionally invested in public companies are now putting more of their money into private tech start-ups in hopes of better returns.
Lyft is Uber’s main competitor in the United States, although Lyft has trailed Uber in market share in most regions of the country. The company has heavily invested in growth, and so far this year has expanded its service to 100 new cities, bringing the total number of cities in which Lyft operates to 300.
In the first quarter this year, Lyft said it completed 70.4 million rides, up nearly two-and-a-half times from the same time period a year ago.
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