EquityZen
  • ···
  • Marketplace
  • ···
  • How it Works
  • ···
  • Knowledge Center
  • ···
  • About
  • ···
  • ···
  • ···

Investor Newsletter >

Weekly Update #296: Update | Early Lyft Investors Expecting Staggering Payday as IPO Approaches

EquityZen
Mar 29th, 2019

This week’s content is brought to you by Adam Augusiak-Boro.

Chart of the Week – Update | Early Lyft Investors Expecting Staggering Payday as IPO Approaches

Note: EquityZen analysis above is illustrative only and displays implied internal rates of return (IRR) to previous Lyft investors assuming an IPO on 3/29/19 at $72 per share. Illustrative returns derived from analysis of company regulatory and securities filings.

In an otherwise sleepy year for tech IPOs, Lyft has reignited investor focus on the public markets with plans to start trading on the Nasdaq this Friday, March 29 under the ticker “LYFT.” Lyft’s amended S-1 filing indicates that the company is targeting a price per share of $70 to $72 (and a fully-diluted valuation of up to $25 billion), which would be substantially above its last private valuation of over $15 billion at $47.35 per share (check out EquityZen’s “Lyft: Path to $15B” for a detailed look at Lyft’s valuation history).

A $25 billion valuation is a big number, but what does it mean for Lyft’s prior investors? Below, we dig into just how large some of the investor paydays could be.

Since venture capital and private equity firms typically measure their performance in terms of internal rates of return (IRR) or multiples on invested capital (MOIC), we analyzed each of Lyft’s private funding rounds to see how its prior investors would perform along these metrics upon Lyft’s IPO. Our returns analysis assumes that Lyft’s investors will not be subject to customary post-IPO lock-up periods and will exit their investments at $72 per share on Friday, March 29. Unsurprisingly, the data confirms the benefits of getting in early on a future unicorn—Series Seed investors, which included notable VCs like Keith Rabois, would realize a 93% IRR and a staggering 320x MOIC. Series B investors, which include Peter Thiel’s Founders Fund, would realize a 74% IRR and 34x MOIC, while Andreessen Horowitz, which participated in Lyft’s Series C round, could expect a 62% IRR and 17x MOIC. To put these returns into perspective, a 3x MOIC is the traditional threshold for a “good” investment in the VC industry.

But what about the later stage investors? As we move beyond Lyft’s Series C round, the returns drop off substantially. However, the risk profile of late-stage investors, which increasingly includes private equity firms and corporations, is considerably different from their angel, seed and other early-stage colleagues. “Good private equity returns” typically translates into an IRR of 20% to 40%, as these investors tend to deploy capital in more stable, proven enterprises. Lyft’s implied returns for its late stage investors range from 35% to 74%, which would hopefully meet the returns thresholds of Series E investors like Fortress Investment Group and Rakuten or Series G investors like KKR. Other late-stage Lyft investors include Coatue Management (Series D), Icahn Enterprises (Series E), General Motors (Series F), and CapitalG (Series H), all of which seem to be tracking to strong returns on their investments.

At $25 billion, does Lyft’s valuation make sense?

Yes—at least according to some of the Lyft roadshow attendees who have indicated that they will pay this price. The market will decide if Lyft’s IPO was priced correctly in the days and months after the company’s public debut. However, here are some of our initial thoughts before Lyft starts trading. Lyft’s closest comparable company is of course Uber—despite Uber’s global reach and burgeoning businesses like Uber Eats, Lyft is its only major competitor in the U.S. ride-hail market. Uber reportedly finished 2018 with just over $11 billion in revenue and is supposedly targeting an IPO valuation as high as $120 billion, implying that Uber is valued at nearly 11x its revenue. According to Lyft’s financial disclosures, the company hit $2.2 billion of revenue in 2018, which would imply a revenue multiple of ~11.4x at a fully-diluted valuation of $25 billion, quite similar to Uber. Lyft is also growing much faster than Uber (~43% 2018 revenue growth vs. Lyft’s ~104%), which would theoretically support a higher revenue multiple.  A similar revenue multiple to Uber may imply that investors are offsetting Lyft’s faster growth with Uber’s global presence and the perceived potential of Uber Eats, Uber Freight and other Uber business segments.

In any event, years of speculation concerning the public markets’ view of Lyft will finally come to an end this Friday. As we move closer to Lyft’s IPO, be sure to check out EquityZen’s Knowledge Center for the latest IPO news and analysis.

Other items we’re reading this week:

  • Rent the Runway hits a $1 billion valuation
  • How Nuro plans to spend Softbank’s $940 million
  • MoviePass parent’s CEO discusses the service’s rocky year
  • Uber is paying $3.1BN to pick up Middle East rival Careem
  • Purdue Pharma and Sacklers Reach $275 Million Settlement in Opioid Lawsuit
  • The Backdoor Move Uber and Others Are Using to Shape Labor Rules
  • Europe Adopts Tough New Online Copyright Rules Over Tech Industry Protests
  • Inside Google’s Rebooted Robotics Program
  • McDonald’s Buys Israeli Digital Startup Dynamic Yield
View more newsletters

Join 190,000+ global shareholders and investors on EquityZen

Marketplace

  • Shareholders
  • Investors
  • Managed Funds
  • Investment Returns

Resources

  • FAQs
  • Blog
  • Newsletter
  • IPO Center
  • Knowledge Center

Company

  • About
  • Careers
  • Press
  • Contact Us

Connect

Investment opportunities posted on this website are "private placements" of securities that are not publicly traded, are subject to holding period requirements, and are intended for investors who do not need a liquid investment. Investing in private companies may be considered highly speculative and involves a high degree of risk, including the risk of substantial loss of investment. Investors must be able to afford the loss of their entire investment. See our Risk Factors for a more detailed explanation of the risks involved by investing through EquityZen’s platform.

EquityZen Securities LLC (“EquityZen Securities”) is a subsidiary of EquityZen Inc. EquityZen Securities is a broker/dealer registered with the Securities Exchange Commission and is a FINRA/SIPC member firm.

Equity securities are offered through EquityZen Securities. Check the background of this firm on FINRA’s BrokerCheck.

EquityZen.com is a website operated by EquityZen Inc. ("EquityZen"). By accessing this site and any pages thereof, you agree to be bound by our Terms of Use.
EquityZen and logo are trademarks of EquityZen Inc. Other trademarks are property of their respective owners.
© 2020 EquityZen Inc. All rights reserved.

  • Disclosures
  • Business Continuity Plan
  • Privacy Policy
  • Allocation Policy
  • Form CRS
EquityZen Inc.
30 Broad Street,
Suite 1200
New York, NY 10004

Secured via DigiCert Extended Validation certificate
FINRA's BrokerCheck
SIPC