Something interesting was going on in recent weeks. SoftBank CEO Masayoshi Son was very linked to the idea of investing in Uber. And today he confirmed his interest in pursuing a deal. But there is more to the story. Son also said that, on the other hand, SoftBank is considering buying into Lyft. And we all know what Lyft is to Uber: it is its arch enemy in the US. So, Uber or Lyft?
Speaking to investors following the announcement of SoftBank’s Q1 2017 earnings, Son was open to the idea of SoftBank backing a horse in the US ride-sharing space. We know that it is the largest investor in Didi Chuxing, which is located in China. And it is the largest investor in Ola in India, Grab in Southeast Asia and 99 in Latin America. But it does not have a representation in North America. So there is something to think about. Moving on, during a Q&A session Son expressed his thoughts.
“We are interested in discussing with Uber, but we are also interested in discussing with Lyft. We have not decided which way. But the US is a very big market: it is the most important market. So we definitely are very much interested in the US market. Whether we decide to partner and invest into Uber or Lyft, I don’t know what will be the end result.”
Now about the Lyft: it recently hit one million rides per day. And its valuation is rising. On the other hand, Uber is going through a period of uncertainty with a CEO. However, its business is considerably smaller than Uber’s. To better understand let’s go over some numbers. Lyft closed $600 million in fresh funding at a $7.5 billion valuation in April. And Uber has been valued at over $60 billion. Its value is more uncertain now. Does it paint a better picture? Moreover, some reports show that SoftBank may do business at a lower valuation. And it may involve secondary share sales.
Uber or Lyft?
Son said, that Softbank is “exploring the idea and we would like to discuss with both companies.” And for all that talk it does not appear that any kind of deal is on the table right now. Moreover, Son clarified that he sees ride sharing as a key global industry that Softbank can ill-afford to miss out on. “This is the shared economy and one of the most important industries. I think the way people use the transportation and the lifestyle will be different from today, compared to in, 30 years or 50 years.” He completed his thought with the following: “The autonomous car is definitely coming, and when that stage comes, this ride share business becomes even more important.”
Finally, SoftBank announced a first close of $93 billion for the fund in May. However, it revealed that it would sit out ride sharing deals because of conflicts of interest. But if you think about it that has not stopped SoftBank from stepping up and financing billion-dollar funding rounds before.