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Alphabet is joining a $300m funding round for electric scooter start-up Lime, adding to an increasingly complex web of deals in transport and “smart city” ventures by the internet company and Larry Page, its co-founder. The holding company of Google and Waymo is investing directly in the scooter start-up in addition to its own venture-capital arm, GV, according to people familiar with the financing. Formerly known as Google Ventures, GV acts like a traditional Silicon Valley venture capital fund and is leading Lime’s round.
By injecting a similar amount to that put in by GV, Alphabet is adding to a small number of deals it has backed directly at the holding company level — even though it already has a number of other internal funding vehicles to handle outside investments. Other Alphabet investments include SpinLaunch, which is developing a space catapult, and United Masters, which is using data analytics to reinvent the music label. The round values Lime at about $800m, or $1.1bn after including the funds raised, according to people with knowledge of the terms.
Spokespeople for Lime, Alphabet and GV all declined to comment. Axios had reported GV’s investment in Lime earlier this month but Alphabet’s additional involvement has not previously been disclosed. The two-pronged investment highlights the growing complexity in the way Alphabet is putting some of its excess cash to work in search of future growth. It has another investment vehicle for later stage investments, called CapitalG, and Google itself makes direct investments in other companies.
Google set up its own artificial intelligence fund, Gradient Ventures, last year, backing the kind of early-stage start-ups that might otherwise have been expected to get money from GV. The bewildering array of apparently overlapping investment vehicles was another example of Alphabet’s failure to disclose enough to shareholders, said Youssef Squali, an internet analyst at SunTrust Robinson Humphrey. “We need to understand the logic of having four sources of investment,” he said. Mr Squali added that Alphabet shareholders were showing growing interest in the company’s so-called other bets — the name it gives to long-range investments in new businesses beyond Google — and they were likely to support the apparent proliferation of new investment conduits. “You definitely want Alphabet to be aggressive in making big bets in the future, it’s the only way to sustain above-average growth in the long term,” he said.
Together, CapitalG, GV and Gradient invested in more than 100 deals in 2017, according to Crunchbase, making the group the most active corporate investor last year. Others in Silicon Valley who have invested alongside Alphabet say the holding company typically gets involved directly in deals that are considered strategic to the group’s business. That could point to deeper ties with Lime in future and give it a powerful ally in the intensely competitive scooter-sharing business. Lime’s main rival Bird announced last week it had raised $300m from venture investors including Sequoia and Accel.
However, the deal with Lime could also present conflicts with existing investments elsewhere within the Alphabet group. GV was an early investor in Uber, while Alphabet also has a stake in rival Lyft through Capital G. Both Uber and Lyft have signalled their interest in entering the scooter market, which threatens to take away ride-sharing customers for shorter trips around town. Lime is already competing with Uber and Lyft, as well as several other companies, for a permit to operate a scooter service in San Francisco.
Then there is Waymo, Alphabet’s autonomous driving company, and Sidewalk Labs, its “smart cities” unit that already has various projects focused on tackling urban transit. The growing range of investments reflects a longstanding interest on the part of Mr Page in backing more effective forms of transport and finding ways to make cities operate more efficiently. At times that has spilled over into personal investments beyond Alphabet, such as Mr Page’s flying car start-up, Kitty Hawk.
