Lyft prices IPO at $72, surviving Uber fundraising battle

A view of a Wall Street sign with the New York Stock Exchange in the background, in New York, New York, USA, Dec 20, 2012. EPA-EFE FILE/ANDREW GOMBERT

BANGKOK DESK.- Many thought Lyft Inc., long the ride-hailing underdog, was doomed as it battled a cutthroat rival in an industry where the winner would take all. Now it’s a Wall Street darling valued at $24 billion, Dow Jones Newswires reported Thursday in an article provided to EFE.

For much of the past decade – one in which ride hailing grew from nothing into an indelible part of transportation – Lyft played the part of an also-ran to Uber Technologies Inc. It was subject to a series of aggressive tactics by Uber, which tried to corner the capital markets and make it difficult for competitors to land cash to fuel their growth.

Inside Uber, then-Chief Executive Travis Kalanick and top executives including business chief Emil Michael said their objective was to far outraise any competitor.

«There are going to be competitors. And we will kill them,» Mr. Kalanick, Uber’s co-founder, said in a 2011 podcast interview.

But Lyft didn’t die. Instead, the company with the hot-pink logo will beat Uber to the public markets Friday after pricing its IPO Thursday at $72 a share, raising $2.34 billion. Investors hungry for its shares far outnumbered the amount available in the IPO. At its IPO price, Lyft has a market capitalization around $20.5 billion, according to a Dealogic share count before the deal priced, and a valuation on a fully diluted basis of $24.4 billion.

Uber’s squeeze was at times so effective that even some Lyft investors worried there was a good chance the company wouldn’t survive. But Lyft was able to grow by seeking out unusual fundraising sources and capitalizing on key missteps by Uber that marred its brand.

By the time they launch their IPOs, Lyft and Uber will have each raised more venture capital than any U.S. startup that has gone public, according to Dow Jones VentureSource. While many early investors in the companies initially believed a dominant player would win and be able to make healthy profit margins, billions have been plunged into a war over market share with giant losses at both companies. Uber plans to kick off its own pitch to public investors for its IPO within a month of Lyft, in an offering that could value the company as high as $120 billion.

For this article, The Wall Street Journal spoke with more than a dozen people familiar with the companies’ capital-raising fight, including people familiar with Uber and Lyft’s strategies, investors involved with or witness to their fundraising efforts, and people familiar with both companies’ fundraising histories.

The early history of ride hailing as it largely exists today traces back to Lyft. Its founders, Logan Green and John Zimmer, ran an online ride-sharing board called Zimride that matched people for long-distance car trips.
In 2012, they began matching ordinary drivers with people who wanted rides. Drivers affixed bushy pink mustaches to their bumpers and greeted passengers with a fist bump. Uber, at that point dealing with licensed professional drivers of luxury cars, quickly started its own version called UberX.

Both saw huge potential in the business. But capital was critical in subsidizing rides to get passengers hooked. Lyft said in a fundraising-pitch slideshow that the industry was ripe for a «natural monopoly» in which a company could «set prices to maximize profits.»

By early 2014, Uber and Lyft had similar levels of funding from venture-capital firms – Lyft from Mayfield Fund and Andreessen Horowitz, Uber from Benchmark and Menlo Ventures.

Then Uber stepped on the gas. In one funding round after another, it scoured the globe for capital and raised it by the billions. Meanwhile, Mr. Kalanick had started a push to steer money away from the company’s competitors, especially Lyft.

Before looking at Uber’s financials, potential investors had to sign away their right to invest in Lyft or any other ride-hailing company for as long as a year. Investors said they had never seen another company ask for such an agreement.

Deja un comentario