Lyft: Closing the Gap on Uber
Logan Green and John Zimmer founded Lyft, a ridesharing platform, in June 2012. It was first launched as a service of Zimride, a long-distance ridesharing company they had previously founded in 2007. Lyft was fundamentally designed as the first peer-to-peer ridesharing service, unlike Uber’s original value proposition as a mobile app to request premium black cars in a few metropolitan areas. As a brand, Lyft became known for the large pink furry mustaches drivers attached to the front of their cars. Unlike Uber’s professional look-and-feel due to its roots in black car services, Lyft riders were given an opportunity to have a personal connection with the drivers. Lyft riders were encouraged to sit in the front seat and fist bump with drivers upon meeting.
In terms of valuation and fundraising, the company was valued at approximately $11.5 billion as of December 2017 and has raised a total of $4.1 billion in funding. Key investors include Andreessen Horowitz, Founders Fund, Mayfield, General Motors, and Capital G, Alphabet’s private equity investment arm.
In terms of scale, Lyft currently operates in an estimated 300+ U.S. cities, including New York, San Francisco and Los Angeles, and provides an estimated 30 million rides a month. Lyft will be expanding into Canada in December 2017 to compete with Uber.
We feel optimistic about Lyft’s execution and track record to date, given its rising market share in the U.S. Our investment thesis for Lyft is driven by the growing adoption of ridesharing apps among consumers, Lyft’s exclusive focus on U.S. to date, and second-mover advantage helping Lyft’s pathway to profitability. Lyft, however, faces significant competition from larger ridesharing companies and remains undeveloped overseas. The key issue for investors to monitor over the next eighteen to twenty-four months is the effect of competition on Lyft’s market share and any evidence of greater losses as Lyft ramps up its international presence.
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