As tech firms continue to partner with ride-hailing firms to get their autonomous car projects off the ground, business scenarios continue to astound and generate buzz. Recently, Japanese multinational telecommunications firm Softbank Group Corp. invested a hefty sum in ride-hailing service firm Uber.
In a related development, Google parent company Alphabet has plunked a $1 billion investment in Lyft through the tech firm’s growth investment arm CapitalG. The fresh flow of funds that established tech firms have injected into competing companies may have just fueled an escalating ride-hailing war.
It can be noted that Google Ventures had previously invested over $250 million in an early stake in Uber. That was way before things got complicated – when Waymo, Alphabet’s self-driving car division, filed a major suit against Uber for allegedly using proprietary information and building a company from it.
Softbank’s move may convey that it is quite vested in Uber’s success, it had previously set its sights on Uber’s competitors. The recent developments underscore that in the world of business, changing alliances continue to be the norm.
For startup firm Lyft, which benefits a great deal (in terms of having a strengthened industry position) from having a formidable partner in Alphabet, the recent major deal closed signified something more, business insiders noted. It showed that the tech firm is seriously attuned to, and hoping to cash in on, the startup company’s future growth. In fact, CapitalG’s David Lawee will be occupying a Board seat on Lyft as part of the negotiated agreement.
On its website, Lyft expressed that the new round of financing served as a big opportunity enabling it to better serve the economic, environmental and social future of the cities that it serves. Though it is a relatively new industry player, Lyft has grown into a ride-hailing service catering to 95 percent of the US population, registering a marked increase of 54 percent at the beginning of the year. Lyft has partnered with automakers, notably General Motor, at the start of 2017, and has been testing driverless technology for months.
Ride-hailing company on the mend
Over at Uber, the corporate reorganization and realignments with investors have necessitated many top-level discussions. Uber, as many knows, suffered a big blow with recent controversies ranging from sexual harassment allegations hurled against the company’s former CEO, to lack of transparency, apart from international strikes and driver-related problems.
As a company that has been placed in a difficult situation, Uber stands to gain much from a new corporate allegiance and funding. The designation of the new CEO Dara Khosrowshahi and new partnerships bring with it a firmer resolve to mend a toxic corporate culture and get people to love the company anew.
A high-profile Uber board member also affirmed that the corporate rebuilding measures and various other steps that Uber has taken, to date, lead to a grand plan for the company’s eventual IPO in 2019.
Notwithstanding Uber’s major investor, Lyft – regarded as a distant second to Uber — is not about to be left by the wayside. The new deal has bolstered Lyft’s position. It is now valued at $11 billion, a significant increase from a $7.5 billion valuation in April. Uber is valued way beyond that, its industry position shored up by Japanese conglomerate SoftBank’s recent investment.
Keeping options open
In any case, the key participants bracing to bring their self-driving car innovations to market have kept their options open. The industry, after all, is a dynamic one, and corporate realignments will keep happening.
With an eye on the long-term, Lyft has been working with Alphabet’s self-driving arm, Waymo, to develop driverless cars. The company’s bottom line, as top executives foresee, is expected to be buttressed by 2018. In recent months, there has been surging interest from automotive makers on Lyft.
Uber, for its part, has been aggressively taken the lead in developing driverless cars a few years back. The ride-hailing service company banked a lot on its brand identity and gained many customers across the world. Being very much consumed by hitting growth targets, however, had its pitfalls. Uber soon suffered corporate burnout.
As Uber eventually suffered from a tarnished image following driver protests as well as successive scandals plus a major lawsuit from Waymo, Lyft emerged as the startup that seemed ready to do things differently. With the recent investment from Alphabet, it can now push through with its expansion thrusts.
Lyft had previously embarked on collaborative arrangements with firms intent on rolling out self-driving vehicles. Topmost in mind for investors that have cemented partnership deals with ride-hailing firms, business analysts have noted, is having a say in the future industry of driverless vehicles.
Softbank CEO Masayoshi Son, who has led investment decisions involving numerous Uber competing firms, is said to be among the firm believers in driverless car technologies. Google’s interest in driverless cars, undoubtedly runs deep. Both firms’ recent infusion of capital on their partner-firms signify their belief in the huge potential value self-serving vehicles present in the next era.