Lyft’s Biggest IPO Winners

Winners also include Wall Street activist investor Carl Icahn and e-commerce executive Hiroshi Mikitani, who each bet against the prevailing wisdom in Silicon Valley at the time that Lyft would likely die at the hands of Uber. Mr. Icahn’s $100 million investment in 2015 is now likely worth $370 million. The biggest beneficiaries also include Lyft’s co-founders, Logan Green and John Zimmer, who will come out of the IPO with stock worth $600 million and $416 million, respectively, though both men previously sold some of their shares to other investors.

Some early VC investors, including Founders Fund, Coatue Management, and Third Point sold some or all of their stakes along the way, so are likely to miss out on a more meaningful return. To be sure, the returns investors realize will depend on what price they eventually sell at. Many early investors have to wait six months to sell, due to “lock-up” restrictions. By that time Uber, Lyft’s bigger rival, will likely have gone public. Where Lyft stock will be trading then is uncertain.

Lyft said on Wednesday it expected to go public at between $70 and $72 a share, valuing the company at more than $20 billion.

The Information has tallied the returns of the individual Lyft investors who led nine of the company’s 10 funding rounds across eight years, including those who backed the company that preceded Lyft, a carpooling service called Zimride. We calculated the returns based on the $72 a share maximum offering price disclosed by Lyft on Wednesday, using information from Lyft’s IPO filings, other documents and based on information from investors. Here are the details:

Floodgate

In 2009, the Zimride founders tried to raise funding at a $4 million pre-investment valuation but were rejected. They made more progress in signing up customers and a year later, in 2010, they managed to secure a seed round totalling $1.2 million—at that $4 million valuation. The majority of the funding came from Floodgate Ventures, arranged by founding Floodgate partner Ann-Miura Ko, who then joined the board of Lyft. (Other investors in the seed round included Keith Rabois, then an internet startup executive.)

Assuming Floodgate put in $750,000 in the seed round, its combined investment in Zimride’s two funding rounds and in Lyft’s first funding round in 2012 was around $1.15 million.

Value of stake at $72 a share: $110.5 million.

Return on investment: 9,500% in nine years

Manu Kumar, who runs K9 Ventures, which invested alongside Floodgate in the seed and Series A rounds for Zimride, will be another big winner. Mr. Kumar said K9 stands to earn more than $36 million from a $350,000 investment over nine years (that figure is based on Lyft’s originally expected offering price of $65). Those earnings would include some shares he sold along the way, but Mr. Kumar said he holds the majority of his original stake.

Mayfield Fund

Zimride got enough traction to attract its first major venture investor, Mayfield, in 2011. The firm invested more than $5.5 million as leader of the Series A financing for Zimride. At the time, the company’s shares cost 76 cents apiece. Mayfield went on to invest nearly $9 million in three subsequent rounds and later sold about 1.7 million shares representing around $1 million of its original investment, for a profit of about $50 million. One of the Mayfield partners who led the deal, Raj Kapoor, years later joined the Lyft executive team as strategy officer.

Value of remaining stake at $72 a share: $600 million

Return on investment: 4,260% in eight years

Founders Fund

In 2012 Zimride’s founders changed their mission from environmentally conscious carpooling to on-demand ride hailing with dedicated drivers, after watching the birth of a ride-hailing app called Sidecar in San Francisco, former employees have said. (They sold Zimride to Enterprise Rent-a-Car for less than $10 million a year later, according to a person briefed about the deal.)

The new Lyft app got the attention of then-Founders Fund partner Geoff Lewis, according to an early investor who knew Mr. Lewis. Founders Fund put in about $10 million in Lyft’s series B round, which valued the company at $90 million after the investment, according to another investor. Founders Fund put in another $5 million or so in the next two funding rounds, ending up with around six million shares.

It sold half of its stake later on for about $60 million to a Saudi Arabian investor in 2016 (see more on that investor below), said a person briefed about the matter. The stake Founders Fund has left might be worth more than $170 million if Lyft’s shares hit $72 in the public market. The overall return from the deal thus might be 1,433% of the original investment.

Andreessen Horowitz

Andreessen had famously passed up a golden chance to invest in Uber in late 2011. By spring 2013, when the firm invested in Lyft, there was a belief among some investors that ride-hailing would have multiple winners, similar to the telecom market.

In 2013, Andreessen invested $50 million in Lyft at the equivalent of $4.25 a share. It put in another $50 million a year later at $10.13 a share, emerging from the two rounds with nearly 17 million shares. A person with knowledge of the Andreessen investment said that a couple of years later, the firm sold part of its stake to Saudi Arabian prince Alwaleed bin Talal. The Lyft IPO filing shows Andreessen now holds 15 million shares, implying the firm sold about two million shares to the Saudi Prince. The Saudi sale likely raised around $50 million for Andreessen, based on the price of the round when the Saudi Prince bought in.

Value of remaining stake: $1.08 billion

Total return based on $72 a share: 1,030% or about $1.13 billion from a $100 million investment in five to six years.

Coatue Management

The hedge fund invested about $50 million for five million shares in 2014. Coatue sold most if not all of that amount in later rounds, according to two people briefed about the matter. It generated a net gain of about $150 million, one of these people said.

Return on investment: 300% in three to four years

Icahn Enterprises

Activist Wall Street investor Carl Icahn’s $100 million purchase of Lyft shares in mid-2015 provided a big public boost to the company at a time when Uber executives and investors were arguing that Lyft would be worth nothing in the long run. At the time, according to early Zimride investor Keith Rabois, many investors believed Uber had an “infinite network effect,” in which the company would keep attracting more riders and drivers in perpetuity, leaving no room for a competitor.

Mr. Icahn ended up with 5.14 million shares. Assuming he did not sell in secondary rounds in the past couple of years, those shares would be worth $370 million at $72 a share.

Return on investment at $72 a share: 270% in four years.

Rakuten

The Japanese commerce firm Rakuten invested in several ride-hailing firms around the world, based on CEO Hiroshi Mikitani’s belief that there would be at least two winners in each market. At the very least, he thought smaller players could get bought out by bigger firms. That has paid off: Uber just agreed to acquire Careem, in which Rakuten was a substantial minority investor.

Mr. Mikitani also liked Lyft’s good-guy image. “They treat drivers like human. Uber treats drivers like a robot,” he said in an interview with The Information in mid-2017.

In March 2015, Rakuten announced a $300 million investment in Lyft. The share price at that round was $19.45 per share, meaning Rakuten would have obtained about 15.4 million shares. Rakuten poured another $500 million into Lyft between 2016 and 2018, according to Lyft’s public offering document and an estimate of its 2016 investment.

Value of stake at $72 a share: $2.26 billion, or $1.46 billion profit

Return on original investment: 183% over four years

General Motors

The first major “strategic” investor in Lyft was carmaker GM, which saw Lyft as a natural business for autonomous vehicles that it was trying to develop. In January 2016, GM announced an investment of $500 million. (The share price at that round was $26.49 per share.) Half a year later, GM made an informal offer to acquire Lyft for around $6 billion, but Lyft’s founders wanted a higher price and rebuffed the overture. 

The relationship between the companies has deteriorated since then. GM bought a self-driving car developer, Cruise Automation, that has been trying to develop its own robotaxi network for GM.

Value of stake at $72 a share: $1.34 billion

Return on investment: 169% in three years

Saudia Arabia’s Kingdom Holding Co./Prince Alwaleed bin Talal

The Saudi prince Alwaleed bin Talal, who recently faced trouble at home when he was temporarily confined by rival prince Mohammed bin Salman, bought nearly 11 million shares of Lyft starting in late 2015 via Kingdom Holding Co., a firm he oversees as chairman, according to confidential Lyft data viewed by The Information. Some of the shares were acquired in Lyft’s series F round at $26.79 a share but some were bought from Founders Fund and Andreessen Horowitz, likely at a discount to the Series F price.

It’s safe to assume Kingdom invested as much as $275 million for the roughly 11 million shares. Kingdom’s current stake in Lyft is undisclosed, meaning it is unclear whether it sold down its position in later rounds, when there were further “secondary” transactions allowing existing shareholders to sell to new ones.

Value of original stake at $72 a share: $792 million.

Theoretical return on investment: 188% in three and a half years.

Fidelity

Fidelity, a frequent investor in private tech companies, bought into Lyft in the company’s last two fundraising rounds, at prices ranging from $39.75 to $47.35 a share. Despite its relatively late entry, its gain will be solid.

Value of Fidelity’s stake: $1.3 billion

Return on investment: 65% in 15 months on $808 million investment

Alphabet

In late 2017, Alphabet, which had been one of the biggest outside investors in Uber, shifted its loyalty to Lyft amid long-simmering tensions with Uber.

Value of stake: $921 million

Return on investment: 80% in just 18 months on $500 million investment.