The peer-to-peer ride-sharing company and booking app is said to be in talks with new and existing investors to raise $250 million in additional funding that would value the company at $2 billion, according to Bloomberg.
Lyft already raised $332.5 million, a substantial sum but still significantly less than Uber’s $4.9 billion. Lyft today operates in 60 U.S. cities, far fewer than Uber, which has drivers in 277 cities in 54 countries.
News of the potential new round comes just two weeks after Lyft revealed a series of re-branding and promotional initiatives aimed at increasing brand awareness, attracting more drivers and riders, and expanding to new cities.
Will a new look and more money be enough to keep Lyft’s hold, or increase it, in the expanding on-demand ride market?
“Lyft has to find a way of differentiating itself from Uber, perhaps as the more humane version of car sharing,” says New York University’s Aswath Damodaran, a finance professor who blogs about Uber and ride-hailing services.
“Uber is playing hardball with drivers across the country and Lyft may be able to exploit that. I think that it is key that Lyft line up enough financing to survive, since Uber is probably going to try to price them out of existence.”
Damodaran’s comments highlight the importance of Lyft grabbing more financing to maintain its share of drivers and riders in markets where it already exists, let alone cities where it wants to expand to. Even more important is how consumers view the service and whether they tap the Lyft or Uber app when they’re ready to book a ride.
Rakesh Mathur, CEO of taxi-hailing app Flywheel, points out a number of issues for ride-sharing services such as Lyft and Uber, including their legality, surge pricing and safety.
However, he says, “I genuinely believe the growth and success of these apps is the best thing that’s happened to the taxi industry. It’s forcing taxis to adopt technology like ours that will allow them to compete and revolutionize the overall transportation experience.”