RIDING INTO THE PUBLIC MARKETS
Good morning, Term Sheet readers.
Lyft unveiled the prospectus for its initial public offering on Friday.
The filing raised questions around the financial health of the company and whether it could turn a profit in the near future. The San Francisco-based ride-hailing giant may be growing quickly, but its losses are growing fast too. In 2018, the company’s brought in $2.2 billion in revenue and logged $911.3 million in net losses.
“We have a history of net losses and we may not be able to achieve or maintain profitability in the future,” the company notes in the risk factors section of its S-1 filing.
So just how far away is Lyft from its goal of profitability? The prospectus offers one clue. In today’s Data Sheet newsletter, Fortune’s Adam Lashinsky explains:
Lyft has more than $3 billion worth of state and federal net operating loss carryforwards (NOLs), an arcane tax-accounting gimmick that gives companies that lose money the opportunity to deduct these losses from income earned in future years. (This trick is available to other investors as well. See here how the current leader of the free world avoided paying taxes in years past.) Lyft says, however, that even though its NOLs don’t begin to expire until 2030 (federal) and 2021 (state), “it is possible that we will not generate taxable income in time to use NOLs before that expiration, or at all.”
In case any of this was a little confusing, let me break it down for you: Lyft is telling prospective investors it might not make money for 11 more years.
Other things to note:
• U.S. ridesharing market share: 39% in December 2018, up from 22% in 2016.
• Number of active riders: 18.6 million in 2018, which is up from 17.4 million in Q3 of the same year.
• Total venture capital raised to date: $4.91 billion
• Its key shareholders include: Rakuten Europe (13% stake); General Motors Holdings (7.8%); Fidelity (7.7%); Andreessen Horowitz (6.3%); and Alphabet (5.3%).
Of course, the Internet provided some interesting insights that you may have overlooked in the prospectus.
For instance, the word “bike/bicycle” shows up 170 times, “scooter” 159 times, “autonomous” 109 times, “death” 26 times, and “American Dream” two times. Somehow, “pink mustache” didn’t appear even once! We also learned that $0.14 goes to Amazon Web Services for every single ride you take. Lyft is contractually obligated to pay AWS at least $300 million by the end of 2021 for cloud-computing services. Lyft’s co-founders may only own 7% of the company’s stock but they maintain close to majority control of the company thanks to supervoting shares.
OVER AT UBER … As Lyft’s biggest rival Uber prepares to go public, Tony West is helping it navigate its numerous legal issues before the big day. Tony West, Uber’s chief legal officer and a former Justice Department official, is the key figure behind Uber’s most public clean-ups. He settled the trade secrets lawsuit last year by Alphabet’s self-driving car business, Waymo, and negotiated a multistate settlement over a vast 2016 data breach.
Mr. West also worked with Mr. Khosrowshahi to change Uber’s culture. Last year, Mr. West helped Uber settle a $10 million pay discrimination lawsuit by three former female employees. And he helped settle a lawsuit by nine women who had been raped, kidnapped, assaulted or harassed by drivers. The company declined to disclose the terms of the deal.
MEANWHILE … Go-Jek, the Indonesia-based ride-hailing company, continues to raise impressive amounts of capital. Today, the company announced that it raised $100 million from Indonesian conglomerate, Astra International, as part of its Series F round. Go-Jek plans to raise at least $2 billion in funding for this round in effort to build up its war chest in the battle against ride-hailing rival Grab.
PEOPLE MOVES: BoxGroup, the New York City-based early stage investment firm, is expanding beyond its partnership of three. The firm tells Term Sheet it is adding three associates to its ranks. They include Adina Davis, who was previously at Jet.com/Walmart, Parth Dalal, who was at Box, and Natan Wise, who was at ConsenSys Ventures.
“We think this is our optimal size to continue our seed investing,” BoxGroup founder David Tisch told Term Sheet. “No major changes in our focus, but each of them brings a quality background that will enhance our team. Parth with enterprise experience, Adina with e-commerce and brand experience, and Natan with blockchain experience.”
(In case you missed Lucinda’s excellent Q&A with Tisch, check it out here.)
• Shift Technology, a Paris and Boston-based provider of AI-native solutions for the insurance industry, raise $60 million in Series C funding. Bessemer Venture Partners led the round and was joined by previous investors including Accel, General Catalyst and Iris Capital.
• Jet Edge International, a Van Nuys, Calif.-based aviation services platform, raised $60 million in funding. Solace Capital Partners led the round.
• Moka, a China-based developer of a recruitment management system, raised 180 million yuan ($27 million) in Series B funding. Hillhouse Capital led the round, and was joined by investors including Xianghe Capital, GSR Ventures, and GGV Capital.
• Cequence Security, a Sunnyvale, Calif.-based provider of security solutions for enterprises, raised $17 million in Series B funding. Dell Technologies Capital led the round, and was joined by investors including Shasta Ventures.
• RightRice, a manufacturer of rice based snacks and food products, raised $5.5 million in funding. Strand Equity led the round.
• KoBold Metals, a mineral exploration company focused on ethical cobalt, raised Series A funding of an undisclosed amount. Breakthrough Energy Ventures led the round, and was joined by Andreessen Horowitz.
PRIVATE EQUITY DEALS
• ArchiMed has launched a 70 million euro ($79.3 million) takeover bid for Bomi Italia (BIT: BOMI).
• Further Global Capital Management acquired Payment Alliance International, a Louisville, Ky.-based ATM provider with more than 75,000 ATMs. Financial terms weren’t disclosed.
• Sage Metals Private Limited, a portfolio company of Delos Capital, acquired Jayco Manufacturing LLC, a Grand Prairie, Texas-based provider of precision custom metal formed components. Financial terms weren’t disclosed.
• Bestop Inc, which is backed by Kinderhook Industries LLC, acquired BullRing, a Texas-based provider of branded, tie-down anchors and ratchet straps for light-duty pickup trucks. Financial terms weren’t disclosed.
• Osceola Capital Management acquired 360 Quote LLC, an operator of lead generation websites in the insurance sector, with a focus on auto insurance websites. Financial terms weren’t disclosed.
• Vance Street Capital acquired Measurand, a Fredericton, New Brunswick-based maker of geotechnical instrumentation used to monitor the deformation of soil and structures. Financial terms weren’t disclosed.
• Carlyle Group agreed to invest in The Nordam Group Inc, a Tulsa, Okla.-based aerospace company. Financial terms weren’t disclosed.
• TA Associates made an investment in ARI Network Services Inc, a provides software and marketing solutions. Financial terms weren’t disclosed.
• Altus Capital Partners acquired Thermal Solutions Manufacturing, Inc, a distributor of heat exchange and thermal management products. Financial terms weren’t disclosed.
• New Heritage Capital made an investment in Rhythmlink International, LLC, a market leading designer and manufacturer of disposable neurodiagnostic devices and consumables. Financial terms weren’t disclosed.
• Precision BioSciences, a Durham, N.C.-based early stage biotech focused on cancer, filed for a $100 million IPO. venBio backs the firm. J.P. Morgan, Goldman Sachs, Jefferies and Barclays are underwriters. It plans to list on the Nasdaq as “DTIL.” Read more.
• ESR Cayman Limited, a logistics real estate developer, has filed a $1 billion Hong Kong IPO, Reuters reports citing sources. Warburg Pincus backs the firm. Read more.
• DataStax, a data management platform, has reportedly filed for an IPO that could value it at $1 billion, Reuters reports citing sources. Kleiner Perkins Caufield & Byers, Lightspeed Venture Partners, Comcast Ventures, and Scale Venture Partners back the firm. Read more.
• Paulson & Co and TriArtisan Capital Advisors LLC acquired P.F. Chang’s China Bistro Inc, a Scottsdale, Ariz.-based chain restaurant operator from Centerbridge, for a reported $700 million.
• Clyde Blowers Capital sold Hydreco, a U.K.-based hydraulic technologies provider, to Duplomatic Motion Solutions, which is backed by Alcedo. Financial terms weren’t disclosed.
• Northill Capital acquired Strategic Investment Group, an Arlington, Va.-based investment manager focused on the OCIO sector. The seller was FFL Partners. Financial terms weren’t disclosed.
• Sentinel Capital Partners sold CINgroup, a Dayton, Ohio-based provider of software and due diligence solutions to attorneys and their clients, to Stretto. Financial terms weren’t disclosed.
FIRMS + FUNDS
• Siris Capital Group, a New York-based private equity firm, raised $3.45 billion for its fourth fund, Siris Partners IV, L.P.
• Boulder Food Group, a Boulder, Colo.-based investment firm, raised $100 million for its second fund, BFG Fund II.