Lyft Inc., a service for connecting drivers to ride-seekers via smartphone software, has raised $60 million from venture firms led by Andreessen Horowitz LLC as it seeks to almost double its staff and take on rivals.
Lyft, which competes with Side.Cr LLC and Uber Technologies Inc., received funds from the firm co-founded by Internet pioneer Marc Andreessen, according to a blog post from the San Francisco-based ride-share company. Previous investors Founders Fund Management LLC and Mayfield Fund also contributed.
Carpooling apps, which let any driver make extra cash by shuttling passengers to their destination, are increasingly popular in urban areas, where congestion and gas prices are forcing commuters to find alternatives to vehicle ownership. With the new funds, Lyft plans to increase its staff to 100 from 55 by the end of this year and expand beyond the four cities where it’s offered now, said Chief Operating Officer John Zimmer.
“It’s important that we grow at a good pace,” Zimmer, who co-founded the company in 2007, said in an interview. “We’re going to move fast, but we’re not going to move fast at the expense of building a great community.”
The social tools built into Lyft’s software — which requires each driver and passenger to log in with their real name and Facebook account — give the company an edge in an increasingly competitive market, said Scott Weiss, general partner at Andreessen Horowitz.
“This is a passionate community around ride sharing,” Weiss said in an interview. “They are incredibly loyal, they are incredibly social and all of that shows up in the numbers.”
Weiss compares Lyft to Airbnb Inc., another Andreessen Horowitz investment that helps users share rooms in their apartments and homes with strangers. Both startups have benefited from the social ties they use to help users form online and in the real world, he said.
Lyft has raised a total of $83 million from investors and offers ride sharing in San Francisco, Los Angeles, Seattle and Chicago. It takes a portion of the fares paid by passengers, and now helps arrange more than 30,000 rides per week. Zimmer declined to discuss Lyft’s sales or what the closely held company’s value would be following the latest financing round. Weiss will become a director, while Ann Miura-Ko, co-founding partner at Lyft investor Floodgate Fund LP, will leave the board, she said in an e-mail.
Lyft and Side.Cr, another San Francisco-based startup, face challenges from California officials who say they violate state regulations for taxi carriers. The companies received cease-and-desist notices in August from the California Public Utilities Commission.
“In these kinds of businesses, that’s one of the major risks,” said Weiss. Lyft should be able to overcome regulatory concerns in part because the company has “cracked the code on trust and safety,” he said.
Bloomberg LP, the parent of Bloomberg.com, is an investor in Andreessen Horowitz.