Box plans to raise $250m in IPO

By Sooraj Shah
25 Mar 2014 View Comments

Enterprise cloud storage provider Box has announced that it plans to raise up to $250m (£152m) in an initial public offering (IPO), as it looks to test investors' readiness to gamble on cloud software from a firm that is making losses.

The Silicon Valley, California-based company revealed that its revenues had doubled last year to $124m (£75m), but its attempts at enticing new customers and improving its services led to a $168.8m (£102m) loss for the fiscal year ended in January, $56m (£34m) more than the previous year.

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As competition grows in the online storage market, with the presence of better known alternatives from Google and Microsoft, as well as business offerings from Dropbox, which had previously been focused on the consumer market, Box is hoping that investors look at its high-profile customers before making a decision on whether they should invest.

CEO and co-founder Aaron Levie (pictured) told delegates at the firm's annual customer and partner conference BoxWorks in October that the firm now has more than 20 million users, from over 180,000 businesses, including 97 per cent of the Fortune 500.

These companies include household names like GlaxoSmithKline, Netflix, Amazon, Toyota and Red Bull.

During BoxWorks Levie, 29, told Computing that Box wanted "an attractive market [to float a company]" and suggested that it was in that market now.

"Just look at how well Workday and LinkedIn are doing. You also want investors to understand your industry and your market," he said.

He gave the example of Salesforce, which Levie said launched at a difficult time, being the first software-as-a-service (SaaS) company ever to float.

"Nobody understood their model for a good five or eight years. [Investors asked] how will it keep growing so fast? How will this revenue model work?."

But he believed that investors now understand the cloud. He also suggested that businesses should ask what the valuation expectation of the company is relative to its real value, before going ahead with an IPO.

"Facebook went public late, but the valuation was such that investors didn't think it was a credible number. Maybe they should've gone as a $50bn company, then grown that to $100bn, rather than going public as $100bn, dipping down to $50bn, then going back up," he said.

Earlier this month, president and CEO of rival collaboration tools provider Intralinks Ronald Hovsepian told Computing that Box was a "consumer-grade player" and questioned its suitability for business users.

Box senior vice president and general manager for EMEA David Quantrell hit back at the claims, stating that the likes of Anglo American and Schneider Electric had just rolled out the platform.

"People are putting us in deliberately as a security solution so they can get control over content," he said.

Box, which recently launched in Europe, with its London office now employing 70 staff, has around 1,000 staff in total, and has swallowed up over $400m (£242m) of venture capital funding to date.

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