Andreessen Horowitz Sells Some Lyft Shares to Prince Al-Waleed
11 February 2016 - 10:40AM
Dow Jones News
Two of the most prominent investors in ride-hailing service Lyft
Inc. quietly sold $148 million in shares of the company in recent
weeks, according to people familiar with the matter.
Andreessen Horowitz and Founders Fund, a venture firm founded by
Peter Thiel, each sold a portion of their stakes in Lyft to Saudi
Arabia's Prince al-Waleed bin Talal and his Kingdom Holding Co. in
a December deal authorized by the company, the people said. The
secondary transaction coincided with Lyft's larger series F round
of funding, in which the company raised $1 billion directly from
investors including General Motors Co. and Mr. al-Waleed.
The share sales may reflect a desire by the venture funds to
return cash to their own investors, called limited partners, which
in recent years have waited longer to realize gains from highflying
startups that have delayed plans to go public.
But they may also be a sign Andreessen Horowitz and Founders
Fund want to take money off the table at a time when Lyft's future
is far from certain. The ride-hailing service is locked in brutal
competition with Uber Technologies Inc. in markets across the U.S.,
where both companies are burning through cash to expand into new
markets and subsidize the cost of low-price rides.
Lyft's valuation soared to $5.5 billion in the funding round it
closed last month, up from just $275 million when Andreessen
Horowitz invested in May 2013 and around $90 million when Founders
Fund invested in January of the same year.
Andreessen Horowitz's sale is especially notable given the
firm's co-founder, Marc Andreessen, has been a particularly vocal
evangelist of the latest tech boom. On Twitter, where he sends
dozens of tweets a day, he often defends the lofty valuations of
startups. Mr. Andreessen has also been a champion of Lyft in his
musings on Twitter, writing in November that the company has an
opportunity because "there are a lot more people who want rides
than own cars."
The Lyft transaction marks the first time Andreessen Horowitz
has sold shares of a closely held company on the secondary market,
said one of the people. Mr. Andreessen also sits on the board of
Facebook Inc., a company whose shares were widely traded on the
secondary market in the run up to its 2012 public offering.
Scott Weiss, the Andreessen Horowitz partner who led the firm's
investment in Lyft, said in a blog post last week he would step
back from investments to spend more time with his family.
In August, the sentiment for highly valued startups began to
shift after the stock market sank over surprisingly slow growth in
China. Talk of a possible world-wide recession has further spooked
the markets, and last week Silicon Valley was rattled last week by
a selloff in public tech stocks, including a 50% collapse of
LinkedIn Inc.
Amit Karp, vice president of venture firm Bessemer Venture
Partners, wrote in a blog that recent equity funding rounds had
routinely valued privately held software startups at four times the
valuation multiple where LinkedIn now trades.
"Unless the public market quickly corrects back up, private
investors will need to correct down to eliminate the wide valuation
gap between the private and the public market," he wrote.
Investment firms launched by Mr. Thiel, the billionaire
co-founder of PayPal, have already sold shares of streaming music
service Spotify AB and are seeking to sell over $100 million worth
of shares in data-flying firm Palantir Technologies Inc.
Uber has largely restricted employees and early investors from
selling its shares, but growing Interest in the ride-hailing leader
has spawned a shadowy market of financial middlemen, who
outmaneuver those restrictions by offering derivatives that deliver
payments to employees based on a stock's perceived value.
Write to Douglas MacMillan at douglas.macmillan@wsj.com and
Rolfe Winkler at rolfe.winkler@wsj.com
(END) Dow Jones Newswires
February 10, 2016 18:25 ET (23:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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