Ride-Sharing Company Lyft gets $500 Million Dollar Backing by GM
We’ve chronicled ride-sharing a lot on this blog in 2015, but it seems that one company is finally putting its money where its mouth is. The popular ride-sharing app Lyft announced on Monday that GM (General Motors) had invested $500 million in the company, or half of its latest $1 billion venture financing goal. The funding, which recently closed, values Lyft at $4.5 billion, not including the new capital.
GM’s support includes more than just providing funds. As part of the investment, GM and Lyft will work on developing an on-demand network of self-driving cars, an area of research that companies like Google, Tesla and Uber have all devoted enormous resources to in recent years.
GM’s $500 million interest in Lyft is the single largest direct investment by an auto manufacturer into a ride-sharing company in the United States. The investment reflects how much consumer automotive habits have been changed by technology over the last decade. With the rise of ride-sharing companies, car manufacturers have raced to adapt to how people can now use each other’s vehicles for rides, which could potentially lead to a decline in car ownership.
Founded in 2012, Lyft helped promote the ride-sharing craze in the United States, positioning itself as a superior alternative to owning a car or using public transportation. Lyft users can summon a private or shared car with a few taps of an app.
On the other side of the spectrum, Uber has raised more than $10 billion to date, and is valued at $62.5 billion, about 14 times Lyft’s new valuation. Uber operates in hundreds of cities in 67 countries. The company also operates its own research center for self-driving cars in Pittsburgh and is steadily recruiting engineering talent from Carnegie Mellon University as well as from competitors like Google, whose efforts on autonomous vehicle research have been well publicized.
Although, Lyft is not as popular as Uber, GM’s investment shows that they have faith that in the future Lyft could potentially be on the top of the ride-sharing mountain.
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