Buzz Newsletter

Comparative Analysis: Lyft Vs. Uber Technologies

by VC Experts


There are almost as many methods of calculating value as there are world religions, since the questions are metaphysical in part and depend on the appetites of the observer. In one of the most common scenarios, a five-year forecast is prepared, the thought being that in the fifth year (assuming the projections are accurate) an exit strategy will be implemented; that is, investors will sell their securities for cash or the securities will become publicly traded, the equivalent of cash. It is usually assumed that the investors will realize their entire return upon implementation of the exit strategy; there will be no interim returns since all revenues will be retained in the business. The valuation formula most often used in connection with the forecast is relatively simple.

An investor plans to invest X dollars in the enterprise today for some to-be-determined percentage of the company's equity. The projections predict the company will enjoy Y dollars of net after-tax earnings as of the day the exit strategy is accomplished; that is, the company is sold or goes public. The analyst then picks a multiple of earnings per share in order to hypothesize what the stock might sell for in a merger or an IPO. Since there is no way of forecasting that multiple, the next best strategy is to use existing multiples in the given industry.[1]

By taking a look at other players in your given industry, you are not only keeping an eye on the competition, but also giving yourself something to measure up against. Whether it be multiples, strategy, or valuations, there are few and far between reliable sources for accurate information, especially when it comes to private company financings. That's why we have provided an example below -featuring two San Francisco based rideshare companies: Lyft (Zimride) and Uber Technologies. This is the type of information that the VC Experts Intelligence Database has to offer - a verified and reliable source that provides complete details on equity financing events for private companies. We pride ourselves in accuracy and back up all of our numbers with federal and state regulatory filings, which are also provided to premium users for download.

[1] "Valuation and Pricing" - Joe Bartlett, Founder and Chairman of VC Experts
View Joe's Blog >>>
JBartlett Joseph W. Bartlett is a recognized pioneer of the national private equity and venture capital bar, Mr. Bartlett is special counsel in the Corporate, Securities and Financial Institutions practice for McCarter & English. He is also founder and chairman of VC Experts, for which he is an active contributing editor. 

JBartlett@McCarter.com

Full Bio



Preferred vs. Common Price Per Share With Valuation

LYFT INC



UBER TECHNOLOGIES INC


Most Recent Financing Round


LYFT INC
Date Amount Valuation Est. Fully Diluted Shares Preferred Price Per Share
04/02/2014 $250.00M $1,003,058,100 99,000,000 $10.13
Round: Series D
Direction: Up Round
Liquidation Preference: Pari Passu
Liquidation Multiple: 0-1x
Stock Type: Conventional Convertible
Capped Participation: No
Anti-Dilution: Weighted Average
Redemption: No
Cumulative Dividends: No
Dividend Rate: 8%
Pay to Play: No
UBER TECHNOLOGIES INC
Date Amount Valuation Est. Fully Diluted Shares Preferred Price Per Share
08/14/2013 $257.79M $3,480,410,247 24,417,077 $142.54
Round: Series C
Direction: Up Round
Liquidation Preference: Pari Passu
Liquidation Multiple: >1-2x
Stock Type: Conventional Convertible
Capped Participation: No
Anti-Dilution: Weighted Average
Redemption: NO
Cumulative Dividends: No
Dividend Rate: 8%
Pay to Play: No

Investment Amounts ($M)


General Information

Lyft: Key Management
• Logan Green - Founder, CEO, Treasurer, Secretary, Director
• John Zimmer - Founder, COO, Director
• Geoff Lewis - Director (The Founders Fund)
• Raj Kapoor - Director (Mayfield Fund)
• Scott Weiss - Director (Andreessen Horowitz)
Uber Technologies: Key Management
• Travis Kalanick - Co-Founder, CEO, Director
• Garrett Camp - Co-Founder, Chairman of the Board
• Thuan Pham - CTO
• Ryan Graves - Head of Global Operations, Director
• Salle Yoo - General Counsel
• Bill Gurley - Director (Benchmark Capital)
• David C. Drummond - Director (Google Ventures)
• David Bonderman - Director (TPG Capital LP)
Lyft: Key Information
Address: 548 Market St. #68514, San Francisco, CA 94104
Geographic Region: Silicon Valley
Industry: Software
SIC Codes: 4119 - Local Passenger Transportation
NAICS Codes: 485320 - Limousine Service
Legal Counsel: Silicon Legal Strategy
Company Website: http://www.lyft.com/
Uber Technologies: Key Information
Address: 800 Market St., 7th Floor, San Francisco, CA 94102
Geographic Region: Silicon Valley
Industry: Software
SIC Codes: 4119 - Local Passenger Transportation
NAICS Codes: 485320 - Limousine Service
Legal Counsel: Fenwick & West LLP
Company Website: http://www.uber.com/
Lyft: Investors (Current & Historic)
• Andreessen Horowitz LLC
• The Founders Fund
• Mayfield Fund
• Coatue Management LLC
• Alibaba Investment Limited
• K9 Ventures LP
• Floodgate Fund, L.P.

Uber Technologies: Investors (Current & Historic)
• TPG Capital LP
• Google Ventures
• First Round Capital
• Lowercase Capital LLC
• Menlo Ventures
• Bezos Expeditions
• Benchmark Capital
• Godman Sachs & Co
• Founder Collective


VC Experts.com, Inc. Disclaimer: The information contained herein is from sources deemed reliable; it does not, however, purport to constitute investment advice nor does VC Experts represent that it contains all information concerning the identified Company deemed necessary or appropriate for investment decisions. VC Experts is neither a broker/dealer nor investment adviser and has no financial interest in the Company analyzed nor in the sale or purchase of any of its securities. The information and data are for reference purposes only and no implied or expressed warranties or assurances as to its accuracy or completeness are furnished by VC Experts. Estimates of valuation are, as indicated, estimates based on such information as we found available, the completeness of which is neither represented or guaranteed; users for any purpose are cautioned and required to undertake and perform their own investigations and due diligence. To the extent that the information incorporates content from specified sources of financial information, VC Experts disclaims any responsibility for the accuracy or completeness of such content.

About VC Experts.com, Inc.: VC Experts.com provides specialized content, valuation & term sheet data on thousands of venture capital financing events, and analytics for managing & modeling private company capital structures. Visit VCExperts.com for more information.




What Do The Deal Terms Mean?

Conventional Convertible Preferred Stock: A type of preferred stock that can also be referred to as "Non-Participating Preferred Stock". This preferred stock typically receives a liquidation preference prior to the common stock, and does not participate on an "as if converted basis" with common stock in any remaining proceeds of a defined "liquidation" event. Upon such a "liquidation" event, holders of Conventional Convertible Preferred Stock must choose whether to receive their liquidation preference or convert their shares to Common Stock in order to participate in the pro rata distribution of assets.

Dividends: The payments designated by the Board of Directors to be distributed among the shares outstanding. The type of share determines the amount. On preferred shares, it is generally a fixed amount. With common shares, the dividend can be omitted if the Directors decide to invest the money in a capital expenditure or if the business is slumping. If the dividend is paid, the amount varies depending on the amount of cash on hand.

There are several types of dividends:

Cumulative—Missed dividend payments that continue to accrue.

Non-cumulative—Missed dividend payments that do not accrue.

Participating—Dividends which share (participate) with common stock.

Non-participating—Dividends which do not share with common stock.

Liquidation Preference/Multiple: The amount per share that a holder of a given series of Preferred Stock will receive prior to distribution of amounts to holders of other series of Preferred Stock or Common Stock. This is usually designated as a multiple of the Issue Price, for example 2X or 3X, and there may be multiple layers of Liquidation Preferences as different groups of investors buy shares in different series. For example, holders of Series B Preferred Stock may be entitled to receive 3X their Issue Price, and then if any money is left, holders of Series A Preferred Stock may be entitled to receive 2X their Issue Price and then holders of Common Stock receive whatever is left. The trigger for the payment of the Liquidation Preference is typically a sale or liquidation of the company, such as a merger or sale of assets.

Anti Dilution Protection: Contractual measures that allow investors in convertible preferred shares an automatic reduction in the conversion price, meaning more common shares on conversion, if a subsequent round is a "down round," thereby mitigating down round dilution.

Pay-to-Play Provisions: A "Pay to Play" provision is a requirement for an existing investor to participate in a subsequent investment round, especially a Down Round. Where Pay to Play provisions exist, an investor's failure to purchase its pro-rata portion of a subsequent investment round will result in conversion of that investor's Preferred Stock into Common Stock or another less valuable series of Preferred Stock.

Post-Money Valuation: The valuation of a company immediately after the most recent round of financing. For example, a venture capitalist may invest $3.5 million in a company valued at $2 million "pre-money" (before the investment was made). As a result, the startup will have a post-money valuation of $5.5 million.


View more terms in VC Experts Glossary


Sign_Up
Date Title Author
04/24/2014 Comparative Analysis: Lyft Vs. Uber Technologies VC Experts
04/23/2014 Muddy Employee Incentive Issues In A Disappointing Exit: 9 Practical Tips For Public Company Acquirers Trent Dykes - DLA Piper LLP - The Venture Alley
04/22/2014 Second Circuit Declares WARN Act Liability of Operating Subsidiary May Be Imposed Upon Parent Holding Company Mitchel "Mitch" H. Perkiel and Carolyn Peterson Richter of Troutman Sanders LLP
04/17/2014 How Venture Capitalists Talk: You Can Make It ... Will Someone Buy It? Joseph W. Bartlett, Special Counsel, McCarter & English LLP
04/16/2014 A Simple Act of Congress to Make Things Better for Startups William Carleton, Contributing Editor, VC Experts
04/15/2014 Big Boys Take Big Risks: Big Boy Letter Bars Investor State Law Fraud Claims Owen Pell and Francis Fitzherbert-Brockholes of White & Case LLP
04/10/2014 What Entrepreneurs Need To Know About Stock Options Joseph W. Bartlett, Special Counsel, McCarter & English, LLP
04/09/2014 Non-Accredited Crowdfunding: A License To Pillage The Vulnerable, Or Democracy In Action? William Carleton, Contributing Editor, VC Experts
04/08/2014 Siga Technologies And The Boilerplate Fallacy Joseph W. Bartlett, Special Counsel, McCarter & English LLP
04/03/2014 7 Tips for Start-Ups Joseph W. Bartlett, Special Counsel, McCarter & English, LLP
04/02/2014 SEC Official To Angel Community: Go Ahead, Develop Your Own Verification Methods! William Carleton, Contributing Editor, VC Experts
04/01/2014 Strategic Considerations for Start-Up Private Equity Fund Managers Bradley M. Van Buren and Frank M. White Jr. of Holland & Knight LLP
03/27/2014 2 Common Down-Round Characteristics, Feat. Jiwire VC Experts Intelligence Team
03/26/2014 Delaware Chancery Court Decisions Highlight That A "Crucial Difference" In Analyzing Director Liability For "Bad Faith" In the Context of an M&A Sales Process Is the Seriousness of the Bidder David A. Niemeyer of Sheppard Mullin Richter & Hampton LLP
03/25/2014 SEC No­-Action Letter re M&A Brokers Andrew M. Ross of Cozen O'Connor
03/20/2014 Three Common Stock Transactions That May Affect Your IRC §409A Valuation Jim Timmins, Managing Director of Teknos Associates
03/19/2014 Further Thoughts About The Public Disclosure Requirements In The Washington State Crowdfunding Bill William Carleton, Contributing Editor, VC Experts
03/18/2014 Top Ten Tips for Purchasing and Negotiating Representations and Warranty Insurance Micah E. Skidmore of Haynes and Boone, LLP
03/13/2014 White Paper: Navigating Change in the Private Capital Markets ACE Portal
03/12/2014 In A Merger, When Are Preferred Stockholders Not Entitled To A Liquidation Preference Payment? Peter J. Walsh, Jr., T. Brad Davey, Thomas A. Mullen, and David B. DiDonato of Potter Anderson & Corroon LLP
Prev 1 3 4 5 6 7 8 9 62 63