Fidelity Investments is spreading its money around when it comes to the ride-hailing market, recently participating in a fundraising round for Lyft, the rival of Uber Technologies Inc., in which Fidelity is already a large investor.
In a statement that Lyft made to Bloomberg this week, the company said that Fidelity is participating in an expanded round of fundraising that is giving the company a valuation of $11.5 billion. The fundraising is being led by CapitalG, the Alphabet Inc. (GOOG) affiliate. Earlier, Lyft had expected to raise $1 billion, but the company has expanded the latest round. Lyft told Bloomberg that the Ontario Teachers Pension Plan, AllianceBernstein, Baillie Gifford, KKR, Janus Henderson and Rakuten are also participating in the round of investing.
While Lyft has always been a second-place player to Uber, it has been gaining market share as its rival struggles with controversies inside the company and a massive data breach that it hid for a year, paying hackers $100,000 to keep the incident quiet. Uber also lost its license to operate in London, paving the way for Lyft eventually to enter that market. Bloomberg, citing a private investor document, reported that Lyft is projecting that it will stop losing money for the first time in 2018. "We will continue to invest in our community and look forward to an even bigger 2018," Lyft co-founder John Zimmer said in a statement to Bloomberg.
While it is not common for shareholders to hold stakes in two competitors, the situation is more usual when it comes to the ride-hailing market. As another example, Alphabet has invested in both Uber and Lyft. Recode noted that Fidelity Investments played a key role in the ouster of Travis Kalanick, Uber's former CEO, this past summer.
This isn't the first time in recent weeks that Fidelity Investments has invested in a startup. In early November, in what was seen as a rare move, Fidelity participated in a round of fundraising for real estate startup Compass, giving the New York-based real estate firm a valuation of $1.8 billion. Compass said in a press release that it raised $100 million in a Series E round of funding with participation from Fidelity, IVP, Wellington Management and other unnamed investors. Compass has been luring investors with promises that it can overhaul the home purchasing process with technology. The company offers an app for real estate agents that provides a dashboard showing data on a neighborhood and enables users to organize home listings to make them more productive.