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Because It's All About Virality - Dropbox Scores Funding At A $10B Valuation

Jan 17 2014, 8:31pm CST | by

Because It's All About Virality - Dropbox Scores Funding At A $10B Valuation

Photo Credit: Forbes
 
 

Crazy you might say but WSJ is reporting that title="Dropbox">Dropbox has raised $250M in a deal that values the company at an incredible $10B making it one of the ore highly valued VC-backed companies out there. The world gasped at the valuations rumored for SnapChat and paid for Instagram and Nest but Facebook and Google respectively – this deal is at least three times those valuations. This from a company founded in 2007.

Why? Well it’s all about growth. Dropbox has skyrocketing user numbers mainly due to the fact that of all the file sharing and synchronization vendors out there, it has found perhaps the perfect combination of ease of use and viral uptake. Sure it costs a lot to support that growth, but with 200 million users and 1 billion files saved on the platform every day, that gets investors pretty excited – the same investors that will pay for the costs of that growth.

Dropbox is trying to move into more of an enterprise vendor and the investors are no doubt banking on its ability to “do a Yammer” and convert a virally fuelled, bottom-up tool into an IT -approved and purchased solution. The jury is out on how well they’re doing on that front, their outage last weekend wasn’t a great look, and their messaging still feels way more consumer focused than truly enterprise.

Arch-rival Box last raised $100M and both companies are set to IPO this year. The big question is who has the ability to best capitalize on the market opportunity – Box with their top-down approach and the rapport they have with the enterprise C-suite, or Dropbox with their bigger users, ease of use and viral conversion.

This is fascinating to watch and there is plenty at stake here – Dropbox has now raised well over $500M, the returns needed to justify that are monstrous – this will either be an incredibly successful leader in the new technology marketplace or else one of the biggest failures the venture world has yet seen. What’ll it be punters?

Connect with Ben on Twitter @benkepes | LinkedIn AngelList

Source: Forbes

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