Uber rival Lyft has closed a $530 million funding round led by Japanese e-commerce giant Rakuten.
The company is planning to use the capital to fight Uber’s lead in the US, focusing on better customer service from drivers and building more loyalty with passengers. Uber is available in four times as many US cities as Lyft, which is active in 65. Each company has tried to undercut the other on prices and poached driver in an attempt to push their competitor out of the market.
The car-sharing firms both launched carpooling services last summer, UberPool and Lyft Line. Lyft is planning to expand Line, which is now available in New York, Los Angeles and San Francisco, to all of its current markets over the next 12-18 months.
Lyft will also expand to its first non-US city by the end of this year, the company’s co-founder and president John Zimmer told the Wall Street Journal. Zimmer did not reveal exactly which market the company would be entering, but said that its Asian investors, which also include Alibaba, make the region an attractive prospect.
Zimmer added that Lyft might benefit from allowing Uber to clear regulatory issues in China and India before entering such markets.
The funding round also included new investor Fortress Investment Group, bringing Lyft to a $2.5 billion valuation. The total number of rides taken in Lyft cars has quintupled over the last year, and it has “demonstrated profitability” in some of the larger cities it operated in.
Rakuten’s investment gives it an 11.9 per cent stake in Lyft. The car-sharing firm has raised $860 million in total from a range of investors including VC firm Andressen Horowitz, one-seventh of the $5.6 billion in equity funding Uber has raised.
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