Posted on Feb 25, 2015 in Press
In their current fundraising efforts, both Uber Technologies Inc. and Lyft Inc. have asked potential investors to sign agreements stating they won’t invest in competitors for a period of six months to a year, according to people familiar with the policies. Investors are asked to sign the pledge before seeing any internal company data that could help them make a decision, the people said.
While venture firms typically refrain from investing in competing startups to avoid conflicts of interest, it is unusual for a company to require this level of commitment before an investment decision is made. That suggests Uber and Lyft are confident investor demand for their equity remains strong despite soaring valuations, said Rett Wallace, chief executive of Triton Research LLC, which does research on private companies.
“I’ve never heard of a company doing this,” Mr. Wallace said. “But it’s not like it doesn’t make sense. There have to be some benefits of being private, including not showing your numbers to people you don’t want to. If a company has the leverage to do it, then there’s no reason why they shouldn’t.”
Read full article at wsj.com
