By Douglas MacMillan
For once, a company is excited about adding Carl Icahn as an
investor.
Icahn, the famed activist investor, has invested $100 million in
ride-sharing startup Lyft Inc., the company said Friday. The
investment is an extension of a round of funding Lyft announced in
March that values the three-year old company at $2.5 billion.
Betting on a young startup with an unproven business model is
unusual for Icahn, an outspoken activist known for taking large
stakes in publicly traded companies and challenging management to
make changes. The Lyft investment is a fraction of the size of his
firm's largest holdings, which include multibillion-dollar stakes
in companies including Apple Inc., CVR Energy Inc. and eBay Inc.,
as of December.
In an interview, Icahn said investing in San Francisco-based
Lyft at a valuation of $2.5 billion is "a no brainer" when you
compare that price to the valuation of its larger rival Uber
Technologies Inc., most recently valued at more than $41
billion.
"If you look at the way the market evaluates Uber and then look
at the valuation of Lyft--Lyft is a tremendous bargain," Icahn
said. "There is room for two."
In Icahn, Lyft saw a chance to add a well-known public-market
investor whose name and connections could help with future
fundraising, said Lyft president John Zimmer.
"As we look to the future to raise capital, whether it's next
year or whenever, that's going to be a large validation," Zimmer
said.
Jonathan Christodoro, one of Icahn's managing directors, will be
added to Lyft's board of directors.
Icahn joins a long list of investors in Lyft that includes
venture capitalist Marc Andreessen, the man he publicly sparred
with last year after taking a position in eBay, where Andreessen
was a board member. Icahn accused Andreessen of being conflicted in
his role on that board, because he invested in numerous startups
that compete with eBay's PayPal unit.
At the time, Andreessen defended himself by saying he is recused
from board discussions that involve a potential conflict of
interest. In an interview with CNBC, Icahn said of Andreessen,
"he's screwed more people than Casanova." In a separate interview
with CNBC, Andreessen said of Icahn, ""Carl just makes stuff
up...he lies and he slanders...his inner six-year-old comes
out."
In an emailed statement, Andreessen said, "All's fair in love,
war and ride-sharing."
Lyft raised $530 million in a funding round earlier this year
led by Japanese e-commerce firm Rakuten. Icahn's investment is the
largest portion of a $150 million extension to that round at the
same valuation, the company said. The company didn't disclose who
contributed the other $50 million to the extension.
Lyft has raised a total of more than $1 billion in its battle
against larger rival Uber, the ride-sharing leader which has raised
more than $5 billion. Uber recently briefed investors on plans to
raise up to $2 billion more, people familiar with the matter told
The Wall Street Journal this month. In that round, Uber's valuation
is likely to top $50 billion.
Uber has expanded to more than 250 cities internationally. To
date, Lyft operates in 65 cities, only in the U.S.
Rolfe Winkler contributed to this article.
Write to Douglas MacMillan at douglas.macmillan@wsj.com
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