July 09, 2014

Box Stores Away $150M in VC Funding, Postpones IPO

Box (NewsAlert), the private online storage service that competes with both Dropbox and enterprise offerings from Microsoft and similar, has snagged a $150 million venture capital infusion from private equity firm TPG.

The company has yet to turn a profit in nine years of business — in fact, its Securities and Exchange Commission S-1 filing showed a net loss of $168 million from the fiscal year that wrapped up Jan. 31. However business is brisk: it has managed to rack up four million consumer and 180,000 business accounts. As such, it has been considering an IPO in order to stay in business.

The cash injection is a welcome respite for the company, which according to The Wall Street Journal will be able to push back going public until the fall, giving it more time to pretty itself up further for investors.

Box has been no stranger to garnering runway: it has mustered a total of $546.1 million in VC funding since its inception, including $81 million in 2011 and $100 million last November. It has a $2 billion valuation.

Has it earned that? It’s investors of course think so. “Box certainly has raised more money as a private company than most of our companies ever raised,” said Jason Green, co-founder of Emergence Capital Partners and a Box backer, speaking to Business Journal back in March. He added, “That market is enormous … Box is really focused on trying to build an enterprise-class product from a security, compliance and integration, and support viewpoint. All those things are required to sell effectively to large companies globally.”

The company has also made key acquisitions — one of the main reasons it hasn’t seen black on the balance sheet yet. In June it bought Streem, a San Francisco-based startup that allows a PC to use a cloud drive in the same way that it would a local disk, capable of making files and content available via the standard Windows interfaces. The storage and cloud aspects make the company a perfect dovetail for Box’s storage service, giving it the opportunity to expand its portfolio and revenue opportunities.

And in May 2013, Box bought Crocodoc, which has a cloud-based service that translates Microsoft (News Alert) Office and PDF documents into HTML5 code for browser viewing.

Box has said that its profit-free state is due to these buys as well as the long ramp-up in cloud business models — between free trials and a pay-as-you-go (and only for what you use) subscription approach takes time to scale, it has argued.

TPG’s Jeff Wilson said in a statement he is “confident” that Box will ramp up, adding that, “We are looking forward to helping them continue to grow.”

Edited by Rory J. Thompson


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