Dropbox snags $250 million funding at $10 billion valuation: sources

SAN FRANCISCO Fri Jan 17, 2014 8:57pm EST

Drew Houston, CEO and Co-Founder of Dropbox, speaks on stage during a fireside chat session at TechCrunch Disrupt SF 2013 in San Francisco, California September 9, 2013. REUTERS/Stephen Lam

Drew Houston, CEO and Co-Founder of Dropbox, speaks on stage during a fireside chat session at TechCrunch Disrupt SF 2013 in San Francisco, California September 9, 2013.

Credit: Reuters/Stephen Lam

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SAN FRANCISCO (Reuters) - Dropbox Inc has secured $250 million from a fund managed by BlackRock Inc and other investors in a new funding round that values the provider of online storage services at almost $10 billion, according to two people familiar with the matter.

The sources declined to be named because the funding round was private.

Dropbox, the 6-year-old Silicon Valley startup many expect to go public sometime this year, is taking advantage of flush investors and skyrocketing valuations for fledgling tech companies.

The company has undergone tremendous growth amid the meteoric rise of cloud, or Internet, storage, which is expected to continue booming alongside mobile computing. Other companies, including Microsoft Corp and Amazon Inc are expanding into the cloud business.

Dropbox's other investors include Goldman Sachs, Sequoia Capital, Accel Partners and Index Ventures.

Dropbox and Blackrock were not immediately available for comment. The Wall Street Journal originally reported the new funding round.

The startup's valuation has climbed alongside demand for online storage. The company was last valued at about $4 billion after a 2011 funding round.

Founded in 2007 by Massachusetts Institute of Technology graduates Drew Houston and Arash Ferdowsi, Dropbox rapidly accumulated users by touting its ease-of-use and polished interface that syncs files across multiple devices and operating systems. It last claimed 200 million users.

The company offers limited amounts of storage for free to individual consumers, who had been its initial focus, but analysts expect it to increasingly go after the deep-pocketed corporate market.

In November, it unveiled what it described as one of the most comprehensive upgrades to its service for businesses, including a feature that allows users to easily maintain both personal and corporate accounts.

Rival startup Box is also preparing to go public as early as 2014, Reuters reported in November. At its last funding round in December, it was valued at $2 billion.

(Editing by Jonathan Oatis and Richard Chang)

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Comments (2)
EmilyKulish wrote:
It is truly amazing that a recent high profile site outage does not wake up those investors. Dropbox and Box are just bubbles. They are in the cloud storage business, which is already a commodity market. The market is already saturated with little growth room, and they are competing with the giants like Google, Microsoft, Apple and Amazon.

They cannot really win in the consumer market – because it is a cash-burning business that keeps requiring more and more VC fundings. If they cannot make money with over 200 million users, they will just lose more money if their user base increases.

And they cannot win in the business service market because their products / services were designed for consumers. It does not matter how they want to spin it, but their features are too weak and limited. Moreover, to offset the loss in their consumer business, they have to gouge their business customers, making them vulnerable to other low cost competitors, such as DriveHQ. They might be able to win a lot of business customers by burning enough cash in marketing, but many of those business customers will eventually funnel to other lost cost providers.

Jan 18, 2014 2:24pm EST  --  Report as abuse
somedooood wrote:
I just dont understand how they pay back this 250 Mil.

Jan 20, 2014 4:20am EST  --  Report as abuse
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