Ride-sharing service provider Lyft announced its latest funding round raised another $530 million thanks mostly to the substantial investment done by Japanese online retailer Rakuten Inc.
Now the American rival of the world-renowned Uber business provider has garnished a valuation of $2.5 billion and the cash secures the company’s expansion plans. On the other hand, the US-only competitor of the smartphone app-based taxi service Uber is nowhere near the latter’s valuation of around $40 billion – which entitled Uber to already expand across the world. Lyft’s latest large shareholder – Rakuten – is making its first foray into the ride-hailing business with a $300 million pledge for an 11.9 percent stake in the San Francisco-based technology company. Among other new investors,Lyft also counts on Fortress Investment Group from now on.
Both Lyft and Uber (together with other, lesser such business operators) have customers that can directly hail rides from their smartphones – and by using their own drivers they have fundamentally disrupted the traditional business of taxi and limousine operators. Uber has especially expanded extremely fast both in and out of the United States – though for both companies the strategies have come with numerous legal challenges across the US and the entire world. For example, both companies were unable to persuade US judges that their car drivers are not employees – claiming them to be mere contractors – and the decisions are expected to have wide implications in US companies that use a “sharing economy” business model.