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Uber and Lyft's Ambition for IPO

2019-01-16 13:09 Wednesday


This is a milestone! Uber and Lyft submitted their IPO applications to U.S. Securities and Exchange Commission (SEC) on December 6th, 2018.

Funding Source and Size

Both companies have attracted hefty investments. Valuation of Lyft is around $18-30 billion USD, and Uber's market capitalization may exceed $100 billion USD, making them the most valuable listed tech companies over the past few years.

Uber

Uber landed over $15 billion USD venture capital from investors including Sequoia Capital, Kleiner Perkins, Benchmark, Microsoft, DiDi and Google Venture. Uber was in desperate need of cash, which attracted the direct product investment from Saudi Arabian and Qatar sovereign wealth funds.

Actually, Saudi Arabian and Qatar are also the leading limited partners of SoftBank's $100 Billion Vision Fund, which is the biggest shareholder of Uber with 15% shares.

Goldman Sachs and Morgan Stanley even predicted that Uber's IPO valuation will be in excess of $120 billion USD. Uber insiders also revealed that Uber named all plans associated with its IPO as "Project Liberty", which implies their high expectation for IPO project.

Lyft

After several rounds of financing between 2012 and 2018, valuation of Lyft rockets from $7.5 billion USD to $15.1 billion USD. Investors of Lyft include Fidelity Investment, Andreessen Horowitz, Founders Fund, Mayfield Fund, Mayfield, CapitalG, DiDi and even Ontario Teachers' Pension Plan.

Fierce Competition: Similar Financing Strategy

Founded in March 2009 and May 2007, Uber and Lyft accomplished their first-round financing in August 2009 and July 2008 respectively.CrunchBase demonstrates the capital statistics in the diagram.

Uber and Lyft's Ambition for IPO

Competition drives Uber and Lyft to upgrade their service model. According to the research from DiMaggio & Powell, enterprises with similar structure and strategy will be created out of fierce competition, which can help them better respond to the market challenges. Data in the scale map is a good explanation for this phenomenon.

Uber and Lyft's Ambition for IPO

To stay ahead of the curve or even surpass competitors, Uber and Lyft have to raise more funds. Both companies provide high-class as well as daily vehicle service. In order to cut the huge costs in driver payment, Uber and Lyft all built their R&D labs as well as established steady partnerships with prominent auto manufacturers to develop self-driving cars.

To win the preference and reputation within capital market, Uber and Lyft spared no efforts to speed up their IPO process by choosing Morgan Stanley and JP Morgan as their lead underwriter.

Settlement of Litigation Removes Barriers for Uber's IPO

Dara Khosrowshahi, CEO of Uber, noted that profitability is not Uber's top priority before listing, but Uber needs a profitable marketing method considering most of Uber's businesses are unmatured except for ride-hailing sector and Uber Eats. After going public, competition between Uber and Lyft will be more intensive.

With the headlong capital injection, competition within ride-hailing market is bound to be growingly fierce.

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