Lyft Inc. raised $530 million from investors including Japanese online shopping company Rakuten Inc. as the U.S. ride-sharing service seeks to expand and compete better with Uber Technologies Inc.

Rakuten agreed to invest $300 million and will acquire a 11.9 percent stake in the San Francisco-based on-demand car service provider, the Tokyo based company said in a statement on Thursday.

“By empowering human connection, the sharing economy is going to fundamentally transform the service industry and benefit society,” Hiroshi Mikitani, founder and president of Rakuten, said in the statement. “Businesses like Lyft that unlock the latent potential that exists in people and society hold the key to the future.”

The funds would help bolster Lyft in its challenge to larger rival Uber, which in January raised $1.6 billion in convertible debt and last year closed a $1.2 billion financing round that valued it at $40 billion. Lyft operates in more than 60 cities in the U.S., while Uber is in 277 cities in 54 countries globally.

Started in 2012 by John Zimmer and Logan Green, Lyft said in January revenue and number of rides rose fivefold in 2014, with the startup reaching profitability in its most established markets such as San Francisco. The company and Uber compete in the ride-sharing and car-pooling market and have both provoked protests from taxi drivers and regulators.

Alibaba Investment

Lyft raised $250 million last year in a round of financing led by Alibaba Group Holding Ltd. and participated in by Coatue Management. It counts Floodgate and Andreessen Horowitz among its earlier investors. Bloomberg LP, the parent company of Bloomberg News, is an investor in Andreessen Horowitz.

Wall Street Journal had earlier reported Rakuten was leading the $530 million financing, which values the company at more than $2.5 billion.

Rakuten has sought to broaden its business through acquisitions. It bought messaging service Viber Media Inc. for $905 million last year. It also purchased Canadian e-book company Kobo Inc. in a $315 million deal in 2012 and led a group investing $100 million in social networking service operator Pinterest in 2012.

This article was written by Stephanie Wong from Bloomberg and was legally licensed through the NewsCred publisher network.

Tags: lyft, sharing, uber
Photo Credit: An ad for Lyft in New York City. Skift