Lyft, the US-based ride hailing startup competing with Uber, has raised $1 billion capital funding from Alphabet’s growth investment arm, CapitalG. The deal values the startup at $11 billion, and entails David Lawee, a partner at CapitalG, to join Lyft’s board of Directors. 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. Alphabet was a major Uber backer, but the companies have clashed over autonomous vehicle technology in recent time.
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 well-funded competition. Both companies are betting the ride-hailing market will continue to expand dramatically and move beyond the largest cities by weaving itself into the transportation fabric of America’s heartland. Lyft has also flirted with international expansion, while Uber already operates in more than 70 countries.