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Private equity in advanced talks with Lyft as it seeks $150m to battle Uber

11 Mar 2014

car headlightsq_lrgRide-sharing app Lyft is planning to raise some $150m in its latest funding round as competition with rival Uber heats up.

The round will apparently close in a tranche of $80m – which is already complete – with a further $70m to follow, Recode reported, citing sources close to the transaction and adding that private equity firm Coatue Management has been in advanced talks with Lyft.

Lyft, which is currently available in 24 cities across 16 states, filed a Form D with the US Securities and Exchange Commission making rumours of the $150m fundraise official.

The round gives Lyft a pre-money valuation of $700m – lower than some familiar with the transaction had expected.

Competitor Uber raised $250m with a $3.5bn valuation last summer. Its UberX offering matches non-commercially licensed drivers with passengers for pay and also offers a luxury sedan option.

In key markets such as San Francisco, the company has been aggressively spending to push Lyft out of the market – cutting prices by 20 per cent in January and reducing its cut of fares to five per cent. It has also run promotions offering Lyft drivers $500 to sign up for Uber without any requirement of exclusivity.

Lyft meanwhile has been pushing for a friendly, community-based feeling for its products with some drivers attaching large pink mustaches to their cars and riders sitting in the front passenger seat. The company has also been working to actively recruit new drivers and expand.

The company has raised just over $80m so far, from investors including Founders Fund, Mayfield Ventures and Floodgate. Its last round in May 2013 saw Andreessen Horowitz invest $60m.

Another competitor, Sidecar, announced funding of $10m last summer but has effectively been priced-out of the race and is now trying to differentiate itself by allowing drivers to promote themselves in more of an open marketplace.

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