Icahn joins a long list of backers for the three-year old startup, including Andreessen Horowitz, New York-based technology hedge-fund Coatue Management, Chinese e-commerce giant Alibaba, and hedge fund Third Point Management.
Lyft, known for cars displaying a pink moustache logo, uses a smartphone app to match riders with paid drivers who use their own cars rather than livery vehicles, a service similar to one offered by Uber Technologies Inc.
But Uber, with a global presence, more diverse services including limousine-like rides, a global presence, and aspirations of expanding into logistics, is a much bigger company. It carries a $40 billion valuation compared to Lyft's $2.5 billion.
Lyft backers question whether Uber's broader mandate amounts to a valuation that is effectively 16 times greater than Uber. In many of its international markets, including China, Uber is facing tough competition from entrenched local players, while in others, such as Korea, it faces legal hurdles.
Uber fans say that building a global brand ultimately will make the company a stronger player, even if it faces setbacks in some markets along the way.
Technology has been a big part of Icahn's investment focus, with bets like Apple, Nextflix and eBay, but he generally does not invest in companies as young as Lyft, which was founded in 2012.
Last year, Icahn accused Andreessen Horowitz partner Marc Andreessen, who was a board member of eBay at the time, of having a conflicted role because of Andreessen's venture investments that competed with eBay.
On CNBC, Andreessen compared Icahn to a lying six-year-old. Now that he and Icahn will be co-investors in Lyft, he is making light of the past squabble.
"All's fair in love, war and ride-sharing," Andreessen said in a statement emailed to Reuters.
One of Icahn's managing directors, Jonathan Christodoro, will join Lyft's board, Lyft said in a statement on Friday.
The San Francisco-based company had raised $530 million in a funding round led by Japanese online retailer Rakuten Inc in March. The financing announced today is an extension of that March round, the company said.
Lyft is in 65 U.S. locations. Icahn was not immediately available for comment.
© Thomson Reuters 2015
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