Lyft and Uber seek new rounds of funding as Millennials ditch cars
Lyft, the ride-hailing app, is growing and is on target to reach $1 billion in gross annual revenue by November 2016. A new round of investing could see the company raise an additional $500 million in capital.
In this March 12, 2014 file photo, Katie Baranyuk gets out of a car driven by Dara Jenkins, a driver for the ride-sharing service Lyft, after getting a ride to downtown Seattle.
Ted S. Warren/AP/File
Lyft is on track to reach $1 billion in gross revenue a year by November 2016 and seeking $500 million from investors.听
Lyft, the ride-hailing service often overshadowed by the larger Uber, has been making steady gains in the shadows. Lyft President and Cofounder John Zimmer announced the company was on track to make $1 billion in annualized gross revenue by November 2016. The announcement was made at the Connected Car Expo in Los Angeles, .
The company is betting on the new $1 billion milestone positively affecting its valuation. Lyft is currently seeking to raise $500 million at a valuation of $4 billion in a new round of investing, . Lyft鈥檚 current valuation is about $2.5 billion.
鈥淐hange is happening faster than expected, and continues to accelerate,鈥� Mr. Zimmer said in a speech at the聽聽on Tuesday.
Uber, a much larger rides-hailing competitor started in 2009, is also seeking new capital. Uber is seeking $1 billion at a valuation of $60 billion to $70 billion, The New York Times reported. The company鈥檚 current valuation is at about $50 billion and is available in over 300 cities in the US, making it the largest ride-hailing app available.
Lyft has been firmly in second place behind Uber as ride-hailing services have gained prominence, and it seldom attracts the media attention Uber does. But 聽the $1 billion gross annualized revenue shows the company is making strides forward.
The smaller ridesharing company operates in more than 190 cities in the US. It has a 40 percent market share in San Francisco and a 45 percent market share in Austin, two major markets for ride-hailing apps, . Lyft has also partnered with China鈥檚 Didi Kuaidi, a major Uber competitor in Asia, a region in which Uber has recently poured over $1 billion in investments.
In October, Lyft had its best month ever, giving over seven million rides. Much of the recent success is attributed to Lyft Line, a service in which customers share rides (and costs) with others traveling in the same direction. Lyft is also increasing its focus on transportation between mass transit stops.
鈥淲hat we鈥檙e finding is across the country, 20 percent of rides start and stop with public transit鈥︹�� Zimmer .听
Providing transportation to and from public transport stops is a potential growth market for Lyft in terms of catering to its traditionally millennial aged consumers. 49 percent of millennial commuters used mass transit, while only 26 percent drove or used a car.The national study , found similar results.
聽鈥淭he Millennial generation seems to be defying its sheltered, suburban upbringing by delaying the acquisition of a driver鈥檚 license and choosing transit,鈥� researchers for Who鈥檚 On Board wrote in the survey.