Dropbox mulls IPO, opens door to more

The prime candidates are so- called unicorns, privately held start- ups valued at more than $ 1 billion.

Tech start- ups SAN FRANCISCO have been delaying their IPOs for years longer than the previous generation of Web companies. There are signs that resistance is started to crumble.

Dropbox, one of the bestknown unicorns yet to go public, is eyeing an initial public offering in early 2017, according to a person close to the deal who asked not to be identified because the matter is private.

The file- storage company’s view underscores a growing business and a company undeterred by the sluggish stock market performance of rival Box, whose stock has languished since it went public last year, say analysts.

Spokeswoman Lin- Hua Wu declined comment. Bloomberg News earlier reported the possibility of a 2017 IPO.

A Dropbox IPO could lead to more tech IPOs, say some venture capitalists and tech executives. A recent flurry of mergers and acquisitions, coupled with the recent IPO successes of Twilio and Line, has prompted speculation that privately held companies seek exit strategies.

Marc Andreessen, co- founder of venture capital firm Andreessen Horowitz, has predicted a rush of IPOs in 2017 and 2018 and more mergers and acquisitions this year.

Besides Dropbox, the prime candidates are Uber, Snapchat, Airbnb and Pinterest, say venture capitalists and tech execs contacted by USA TODAY. All these are so- called unicorns, the privately held start- ups valued at more than $ 1 billion.

Snapchat had no comment. Airbnb spokesman Nick Papas said the company has no plans to go public. Pinterest was not immediately available for comment.

Uber CEO Travis Kalanick, whose ride- hailing company is valued at more than $ 60 billion, also is in no hurry — adamantly so. If he had his druthers, Uber wouldn’t go public until 2030, he told USA TODAY Thursday.

“There’s a bureaucracy in being public that slows you down, and I’d really prefer not to see my employees refreshing on finance . google. com every five minutes,” Kalanick said.

Last year, Dropbox CEO Drew Houston said it had no plans to go public anytime soon. The 9- yearold company, in the process of expanding into cloud- based collaboration, has endured criticism for a once- lofty valuation of $ 10 billion that has since eroded in the opinion of some investors.

But there have been encouraging signs that an IPO could be in the offing. Dropbox is not profitable, but it is fully funded and “free- cash- flow positive,” Houston said in June.

The company said it has 200,000 paying business customers and 500 million registered users globally.

Dropbox led the $ 2.43 billion worldwide market for file- sharing last year with a 25% share. Microsoft had 19%, followed by Box ( 12%), Google ( 10%) and Apple ( 7.5%). Google and Microsoft grew at faster rates than Dropbox, according to researcher IDC.

Dropbox’s flirtation with a potential IPO reflects the raised stakes unicorns face after years of record funding from venture capital firms and private- equity funds, says Beth Ferreira, managing partner of WME Ventures.

Investors typically expect a return on their investment in seven to 10 years and “some of these companies ( unicorns) have been around that long,” Ferreira says.

Companies that went public last year had been around an average of 10 years. That’s a big difference from the first dot- com wave. In 1999- 2000, most companies rushed into their IPO after just 41⁄ years, according to An2 dreessen Horowitz.

But, like most everything in life, it all comes down to timing.

“A thriving IPO market for tech stocks in 12 to 18 months is a beautiful dream,” says Gina Bianchini, founder and CEO of Mightybell, a start- up for creating communities on mobile. “How this dream becomes a reality is less obvious.”