Dropbox Raises 250 Billion Through IPO at $10 Billion Valuation

Update: Yes We heard it right!, it was $350 million. On 24th Feb Techcunch sources confirmed that Dropbox has raised a Series C funding from existing investors and major mutual funds at a $10 billion valuation

Drew Houston and Arash Ferdowsi founded Dropbox, Inc. in 2007. The company is headquartered in San Francisco, California. It is a file hosting service that offers cloud storage, client software and file synchronization. It is also known as online backup service. Dropbox allows users to create a special folder on each of their computers which the company then synchronizes in a way so that it appears to be the same folder with same contents regardless of which computer is used to view it.

A per Wall Street Journal report, the Company valuing itself $10 billion as online storage provider, has raised $250 million through IPO in January 2014. Now with this issue, the company has become one of the most highly valued companies backed by venture capitalists.  This is actually the second time that it has raised this amount. Dropbox raised approximately the same amount ($257.2 million) during a Series B Financing back in 2011 that included the support from Goldman Sachs, Index Ventures, Sequoia, and Accel Partners. The company’s valuation in October 2011 was around $4 billion. So it has doubled itself in valuation within a short period of two years. When the company approached investors back in last November they were offered less price than they have realized in the recent issue. The Wall Street Journal had previously reported that the forecasted sale figure of Dropbox for the last year (2013) was around $200 million. The company had $116 million in sales in 2012 which was much more than the revenue figure of 2011 at $46 million.

  • The company presently has over 175 million users for its service and that almost equals the user number of Twitter.
  • Dropbox offers a saleable product with a clear market.
  • Further, the company has a world class team. It has enough money to hire great people.
  • The company also poaches from other tech firms and acqui-hires that include Audiogalaxy and Snapjoy to make it more than a storage space— real Software as a Service Platform.
  • It is earning good money from its existing user base—even though 95% of its current users opt for free version.

 The Reason Why Some Investors Did Not Like Dropbox IPO

  • However, the potential issue with Dropbox is that although the files are mirrored on your own hard drive they will not synchronize without the Internet connection. The files changes on the server or on any of the computers will be reconciled only then the connection is restored.
  • Many analysts are doubtful over the quality of its future revenue. Although the company is currently making good money in short term from its present user base but once the price of storage gets cheaper, even the present revenue may become unsustainable, it may get squeezed.
  • The company has far lot to do and get more revenue to sustain in future. The company will still depend on businesses willingness to shift to cloud storage.

Because of an obligation, the privacy concern has been compromised with security concern in Dropbox. Like all other US tech companies it has to provide access of its user’s data to US intelligence agencies. For company or user with sensitive data, it is always risky. It is worthwhile to mention that “Artmotion” a Swiss cloud storage provider has increased their revenue since the leak under National Security Agency’s PRISM program where NSA was able to get information from major internet companies like Microsoft, Google, Apple, Facebook, Yahoo, and a few others through written directives. However, the companies denied any knowledge of PRISM.

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