Dropbox Fundraising Could Actually Be as Much as $400 Million
Dropbox's latest funding round values the company at $10 billion, with private equity giant BlackRock leading the deal with participation with existing investors. — But while the round is currently worth $250 million …
Context & Ripple Effects
Dropbox closed its funding round at about $250 million and a near-$10 billion valuation, led by BlackRock with existing investors participating — and Re/code reports the total could still grow to as much as $400 million. That is a sharp markup from what the company was shopping just two months earlier, when Businessweek reported it seeking $250 million at an $8 billion valuation.
The raise lands four days after a multi-day outage that took web and mobile access offline starting around 6pm PST on January 10; Dropbox restored access for most users within three hours and denied any security breach, blaming routine internal maintenance. The pickup across eight syndicating outlets — WSJ, Forbes, VentureBeat, Gigaom and others — reflects both the size of the valuation step-up and BlackRock's presence in a deal traditionally left to venture firms, alongside persistent talk of a possible 2014 IPO.
First-order effects
- BlackRock becomes lead investor in a pre-IPO consumer cloud company at $10 billion, putting mutual-fund-scale capital directly into a late-stage private round rather than waiting for a listing.
- Existing Dropbox backers see their stakes marked up roughly 25% above the $8 billion valuation the company pitched in November, before the round has finished absorbing capital.
Second-order effects
- If the round keeps expanding toward $400 million, Dropbox banks a larger cash reserve ahead of the rumored 2014 IPO window its backers have floated, strengthening its hand against rivals bidding for the same enterprise sync-and-share budgets.
- Other late-stage private companies gain a fresh comp: a blue-chip asset manager paying $10 billion for a revenue-generating but unlisted startup resets what founders and secondary sellers can demand from non-venture buyers.
Third-order effects
- Asset managers buying pre-IPO stakes at headline valuations further blur the line between private and public markets, shifting price-setting power in late-stage rounds from VCs to institutions managing public-market-style portfolios.
- If the pattern holds, more companies of Dropbox's scale will stay private longer while raising ever-larger rounds from PE and mutual-fund buyers, making each new mark a de facto public valuation without the disclosure obligations of a listing.
The trend: Mutual funds and private equity giants are displacing venture firms as the marginal buyer in late-stage tech rounds, repricing companies like Dropbox between private raises and an eventual public listing.