Data sharing business Dropbox Inc., is looking to hire underwriters for an Initial Public Offering that could take place later this year. The IPO will be a test of Dropbox’s valuation. It was previously valued at $10 billion at a private fundraiser in 2014. The company definitely hopes to see its valuation soar. Recent reports suggest that Dropbox will start interviewing investment banks in the coming weeks.
Many tech companies such as Uber and Airbnb have resisted going public in recent months, concerned that stock market investors, who focus more on profitability than private investors do, 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. It has a market capitalization of $21 billion.
At a time when the markets aren’t exactly thriving, Dropbox will have to watch every step it takes. The San Francisco based company, started in 2007 by MIT graduates Drew Houston and Arash Ferdowsi, began as a free service for consumers to share and store photos, music, and other large files but later got commoditized, as Google, Microsoft and Amazon started offering storage for free. The company later extended its business, and now requires the companies to pay a fee based on the number of employees who use the service.
Megha Shah for TechFunnel.com