Lyft and Uber seek new rounds of funding as Millennials ditch cars

Lyft is on track to reach $1 billion in gross revenue a year by November 2016 and seeking $500 million from investors. 

Lyft, the ride-hailing service often overshadowed by the larger Uber, has been making steady gains in the shadows. Lyft President and Cofounder John Zimmer announced the company was on track to make $1 billion in annualized gross revenue by November 2016. The announcement was made at the Connected Car Expo in Los Angeles, according to Fast Company.

The company is betting on the new $1 billion milestone positively affecting its valuation. Lyft is currently seeking to raise $500 million at a valuation of $4 billion in a new round of investing, according to The New York Times. Lyft’s current valuation is about $2.5 billion.

“Change is happening faster than expected, and continues to accelerate,” Mr. Zimmer said in a speech at the Los Angeles Auto Show on Tuesday.

Uber, a much larger rides-hailing competitor started in 2009, is also seeking new capital. Uber is seeking $1 billion at a valuation of $60 billion to $70 billion, The New York Times reported. The company’s current valuation is at about $50 billion and is available in over 300 cities in the US, making it the largest ride-hailing app available.

Lyft has been firmly in second place behind Uber as ride-hailing services have gained prominence, and it seldom attracts the media attention Uber does. But  the $1 billion gross annualized revenue shows the company is making strides forward.

The smaller ridesharing company operates in more than 190 cities in the US. It has a 40 percent market share in San Francisco and a 45 percent market share in Austin, two major markets for ride-hailing apps, Mr. Zimmer told Bloomberg. Lyft has also partnered with China’s Didi Kuaidi, a major Uber competitor in Asia, a region in which Uber has recently poured over $1 billion in investments.

In October, Lyft had its best month ever, giving over seven million rides. Much of the recent success is attributed to Lyft Line, a service in which customers share rides (and costs) with others traveling in the same direction. Lyft is also increasing its focus on transportation between mass transit stops.

“What we’re finding is across the country, 20 percent of rides start and stop with public transit…” Zimmer said to Tech Crunch. 

Providing transportation to and from public transport stops is a potential growth market for Lyft in terms of catering to its traditionally millennial aged consumers. A recent Boston study found 49 percent of millennial commuters used mass transit, while only 26 percent drove or used a car.The national study Who’s on Board: 2014 Mobility Attitude Survey, found similar results.

 “The Millennial generation seems to be defying its sheltered, suburban upbringing by delaying the acquisition of a driver’s license and choosing transit,” researchers for Who’s On Board wrote in the survey.