Lyft Raises $1 Billion From Big New Ally in Battle With Uber

Lyft raised $1 billion in a deal that values the ride-sharing startup at $11 billion, steps up competition with rival Uber and builds ties with internet giant Alphabet, according to Bloomberg.

The new money will help Lyft doubling down on the U.S. market, where it has made gains against Uber but still lags its rival. Alphabet’s growth investment arm, CapitalG, led the round, and David Lawee, a partner at CapitalG, will join Lyft’s board, the startup said in a blog.

The funding marks a major shift in Alphabet’s allegiances away from Uber, and suggests a tighter pairing of its Waymo autonomous vehicle technology with Lyft’s transportation network. Lyft has gained market share in the U.S. this year as Uber suffered from executive turnover and self-inflicted wounds, including a protest over the company’s ties to the Trump administration. Lyft seized the moment, donating to the American Civil Liberties Union and issuing a string of progressive political statements.

The funding is bad news for Uber, which is trying to finalize a major investment from SoftBank. Even if the SoftBank deal goes through as expected, a well-financed Lyft is a blow for new Uber CEO Dara Khosrowshahi. On paper, Uber remains the far more valuable company. It was last valued at nearly $70 billion.

Over the past few years, Uber and Lyft have poured money into subsidies and other short-term stimulants of market share growth. Both companies have looked for more sustainable means of outmaneuvering each other. The new financing may reignite the subsidy wars or it could usher in a new era of responsible, albeit well-funded, competition.