Dropbox seeks to hire underwriters
SAN FRANCISCO: Data-sharing business Dropbox Inc is seeking to hire underwriters for an initial public offering (IPO) that could come later this year, which would make it the biggest US technology company to go public since Snap Inc, people familiar with the matter said.
The IPO will be a key test of Dropbox’s worth after it was valued at almost US$10bil in a private fundraising round in 2014.
Dropbox would begin interviewing investment banks in the coming weeks, the sources said, asking not to be named because the deliberations are private.
Several big US technology companies such as Uber Technologies Inc and Airbnb Inc have resisted going public in recent months, concerned that stock market investors, who focus more on profitability than do private investors, would assign lower valuations to them.
Snap, owner of the popular messaging app Snapchat, was forced to lower its IPO valuation expectations earlier this year amid investor concern over its unproven business model. Its shares have since lingered just above the IPO price, with investors troubled by widening losses and missed analyst estimates. Proceeds from technology IPOs slumped to US$6.7bil in 2015 from US$34bil in 2014, and shrunk further to US$2.9bil in 2016, according to Thomson Reuters data.
Dropbox’s main competitor, Box Inc, was valued at roughly US$1.67bil in its IPO in 2015, less than the US$2.4bil it had been valued at in previous private fundraising rounds.
San Francisco-based Dropbox, which was founded in 2007 by Massachusetts Institute of Technology graduates Drew Houston and Arash Ferdowsi, counts Sequoia Capital, T. Rowe Price and Greylock Partners as investors.
Dropbox started as a free service for consumers to share and store photos, music and other large files. That business became commoditised though, as Alphabet Inc’s Google, Microsoft Corp and Amazon.com Inc started offering storage for free. Dropbox has since pivoted to focus on winning business clients, and Houston, the company’s CEO, has said that Dropbox is on track to generate more than US$1bil in revenue this year.