Masterclassing

Lyft Announces $530m Funding Round

Tim Maytom

lyft comboRide hailing service Lyft has raised an additional $530m (£353m) in a funding round led by Japanese eCommerce firm Rakuten, which invested $300m for an 11.9 per cent stake in the company.

Lyft, which uses an app to match riders with paid drivers, will use the funds to expand its presence in the 65 markets within the US it currently operates in, and invest in its cab-sharing service Lyft Line.

The company also plans on developing new technologies based around its core service, such as Driver Destination, its ride-sharing service that enables users to give other people lifts while on their way to work.

"With an additional $530m in funding, led by Rakuten, we will accelerate more quickly toward a world where every seat is filled and every driver and passenger is empowered to join together in improving our economy, environment and local communities," wrote the Lyft team in a blog post announcing the funding.

"We will continue hiring the best talent to develop technology that reduces traffic, takes cars off the road, builds community and improves the economy. Our roadmap is exciting, and we look forward to sharing more of it with you in the coming months."

Both Lyft and Uber recently suffered a set back after judges ruled that the companies' drivers cannot be classed as independent contractors as opposed to employees, in cases that may have wide implications for apps and services based around the 'sharing economy'.

The rulings came from lawsuits filed by drivers seeking reimbursement for expenses such as fuel and vehicle maintenance, and may result in drivers for both services being forced to pay Social Security benefits, workers' compensation and unemployment insurance, dramatically increasing their running costs.

US District Judge Vince Chhabria noted the difficulty in defining the status of Lyft's drivers, saying, "The jury in this case will be handed a square peg and asked to choose between two round holes".