Lyft this week set out to raise a new round of funding to help it catch up to the massive war chest raised by its rival Uber, sources said.
The ride-hailing company company—which was last valued at $850 million—is in the midst of its efforts, with what one person close to the situation said was a "significantly" higher valuation. Both that and the amount to be raised are still in flux.
Lyft has already raised more than $330 million, which would be significant for any other startup. But that amount is dwarfed by the nearly $3 billion that Uber has collected, with a valuation of more than $41 billion.
Uber operates in more than 260 cities around the world, while Lyft is in just over 60, all in the United States. Lyft is also more focused on the affordable end of the market, with many first-time professional drivers using their own cars.
Uber CEO Travis Kalanick has admitted to meddling with Lyft's last funding round by trying to scare off potential investors.
According to sources, Lyft's latest funding efforts are going well. However, with all the funding Uber has raised, Kalanick also seems to have succeeded in cornering some of the potential investor candidates that competitors like Lyft might have tapped, said Anand Sanwal of investment research firm CB Insights.
"We looked at 30 of the big investors—hedge funds, private equity, corporations and sovereign wealth funds—folks who have larger balance sheets who do deals in tech," Sanwal said. "And they've sort of boxed Lyft out."
Lyft does have the deep-pocketed Andreessen Horowitz and Coatue Management on its side from previous rounds, although Sanwal said it would be harder to put together a billion-dollar round in pieces with the available backers. "The dark horse might be: Is there some strategic [investor] who wants to get into this who's worried about Uber," he said.
One obvious investor could be Japan's SoftBank, which has put money into multiple Uber rivals around the world. It led a $210 million for Ola in India, $250 million for GrabTaxi in Southeast Asia and $600 million for Travice, which operates Kuaidi Dache in China. But sources said SoftBank has not yet considered making an investment in Lyft.
As always, the competition within the hot space continues to get even more intense.
Last week, Uber cut prices in many U.S. markets where Lyft operates. In recent months, Uber has also aggressively recruited from Lyft's leadership team, hiring former COO Travis VanderZanden (there's a lawsuit over his conduct during the switch), Lyft VP of Operations Stephen Schnell and Director of Product for Growth Ryan Fujiu.
Lyft declined to comment.
CNBC's parent NBC Universal is an investor in Re/code's parent Revere Digital, and the companies have a content-sharing arrangement.