Lyft has snagged a $300 million investment from Japanese e-commerce giant Rakuten in a funding round that gives the ride-sharing company a $2.5 billion valuation, according to Bloomberg News.
Lyft announced Rakuten’s participation in the $530 million round in a blog post on Wednesday (March 11), but was light on financial details. However, Rakuten announced on Thursday that it led the Series E round with $300 million, giving it an 11.9 percent stake in Lyft. Rakuten CEO Hiroshi Mikitani also gave the deal a roaring endorsement: “We have seen the future and this is it,” he said.
Fortress Investment Group was also part of the new round, according to The Wall Street Journal. Existing investors include Andreessen Horowitz, Floodgate, Founders Fund, Mayfield Fund, and Alibaba.
The new funding will primarily be used in Lyft’s effort to wrest U.S. market share from its larger rival, Uber, in the 65 cities where Lyft currently operates, and to expand its U.S. footprint further, according to Lyft President John Zimmer.
Uber operates in 292 cities around the world, and Zimmer hinted to the WSJ that Lyft would take a wait-and-see approach to global expansion. “Those international markets have a lot of complexity and in many ways they are not developed,” he said.
But Rakuten has other ideas, saying in its funding announcement that the new capital will let Lyft “invest in both domestic and overseas expansion.”
Either way, Lyft will have to continue navigating a set of legal hurdles to its business model. While it has largely managed to dodge the kind of passenger-data reporting problems that caused New York City’s Taxi and Limousine Commission to crack down on Uber, both companies currently face a lawsuits in California by drivers who are claiming to be employees rather than contractors. On Wednesday, two separate federal judges refused to make a decision on that question, saying it must be decided by a jury, Reuters reported.