Alibaba Group Holding, an online-shopping powerhouse in China, is using some of its cash to buy its way into Silicon Valley. Alibaba's latest target is Lyft. The Chinese company kicked money into a $250 million funding round for the ride-sharing app developer, Lyft announced today.
The backing of pink-mustachioed cars comes just two weeks after Alibaba led a $280 million investment in TangoMe, a messaging app company based in Mountain View, California. In October, Alibaba led a $206 million investment in ShopRunner, a subscription service similar to Amazon Prime that offers two-day shipping from major U.S. retailers, as well as a $50 million investment in Quixey, a search engine for mobile apps.
Alibaba is building a presence in the U.S. as it's preparing to file for an initial public offering in New York as soon as this month. Investment banks value the company at as much as $200 billion, making it the second-biggest Internet business by market value behind Google. Listing in the U.S. "will make us a more global company," Alibaba has said.
In the U.S., Alibaba isn't a household name. Andreessen Horowitz, which had invested in previous financing rounds for Lyft, and Coatue Management introduced Alibaba to the startup, which eventually led to the deal, according to Lyft co-founder John Zimmer. (Bloomberg LP, the parent of Bloomberg.com, is an investor in Andreessen Horowitz.)
"They talked a lot about international and how they could be helpful as we expand internationally," Zimmer said. "That was really valuable to us."
While $250 million may seem like an eye-popping number, funding rounds of this size are starting to become more common. Last month, seven U.S. technology companies planned to raise at least $100 million each, compared with 16 during all of last year. Uber Technologies, Lyft's chief rival in the U.S., was valued at $3.5 billion in a funding round last summer.
Lyft is seeing double-digit percentage growth in rides and revenue per month, Zimmer said. He declined to disclose the numbers or the company's valuation in the financing round. After bringing Lyft from two cities to 30 last year, the company plans to use the cash infusion to open in new markets in the U.S. — starting with Tampa, Florida, and Tempe, Arizona, this week — and then overseas.
"There are many markets where the mustache will work," Zimmer said.