Today Lyft confirmed that its long rumored and reported funding round has officially closed. The final number, a $250 million investment, puts it exactly on par with its biggest competitor, Uber, which raised the same amount from Google Ventures back in August of 2013. Lyft says it has expanded from just one city at the start of last year to 30 sites across America today. The new cash will be used to fuel more growth stateside and also help Lyft begin to push into international markets.
There are a few critical differences between Lyft and its competitors, according to the company's founder and president, John Zimmer. "Uber hires professional limo and taxi drivers and sets up offices in each market they enter." By comparison, he says, Lyft has little overhead. "We are a purely peer-to-peer service. It's a software platform that is used by a community of drivers and riders looking to connect."
Zimmer insists that while its drivers come from the ranks of average citizens, Lyft's safety standards mean the service is less risky than your average taxi or black car. "We run criminal background and driving record checks on all our drivers, something that is not even required by taxi commissions in a lot of big cities." Zimmer says Lyft also provides more than $1 million in commercial insurance for all its drivers, an issue that sparked controversy after an UberX driver struck and killed a young girl in San Francisco earlier this year.
Lyft began as a sort of hi-tech ride-sharing board, akin to the ones you might find in the campus center of a college. In some cities there was no standard fare, and riders simply gave drivers a tip at the end equal to what they thought was fair. Zimmer says that as Lyft has grown it has moved away from this model and will soon have a single standard set of fares, which will be the same for all drivers across all cities.
The fares are split 80–20 between drivers and Lyft. Like Uber, the company uses a dynamic pricing model based on demand, although Lyft says its model doesn't just increase fares during high demand, but also offers customers discounts during periods of low usage.