How to raise a monster round of funding when your competitor has 30 times more cash than you and keeps threatening to squash your startup
- Ride-hailing service Lyft recently raised $1 billion in a funding round led by Alphabet's investment arm.
- But just three years ago, Lyft was the little guy.
- Lyft cofounder John Zimmer says raising money came down to showing passion and treating people well.
Ride-hailing service Lyft just raised $1 billion in a funding round led by CapitalG, Alphabet's investment arm. It's now valued at $11 billion.
But there was a time not too long ago when Lyft was a little guy.
On an episode of Business Insider's podcast, "Success! How I Did It," Lyft cofounder John Zimmer told Business Insider US editor-in-chief Alyson Shontell what fundraising was like at that time.
Listen to the full episode here, or listen later with the buttons below:
"It was absolutely hard to do," he said. "We had a competitor that was trying to put us out of business with capital, and that was larger than us and a lot of investors were asking. There was a point three years ago where they had 30 times the amount of capital as us."
Zimmer boiled down his team's strategy to something simple:
"The best advice I can give to other entrepreneurs is to work on what you're passionate about. If you're working on something just to win or working on something just to make money, in all those tough moments, like raising a round when your competitor is trying to put you out of business with 30 times the amount of capital, it's not going to be a genuine pitch. It's going to be hard to overcome those moments.
"But when you care about the work so much, investors can see that. And we had to articulate how we were going to get to where we are today and we found enough people that believed us."
Lyft also built a reputation as the "nice guy," in stark contrast to Uber, which has lately been embroiled in scandal, including fielding complaints of sexual harassment.
Zimmer said, "Treating people well is great for business. It is complementary to doing well in business. But there's been this story told of founders who are just not nice to people and that's what it takes to get ahead. And that's just not true."
"Most businesses require other people to help you get where you need to go. Whether that's our employees - we call them team members - whether that's in our case the drivers or customers, passengers using the service, great service, great hospitality, treating people well, having a good set of values.
"That is great for business, and we are out to prove that, along with the mission we have to make our cities better."
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