Dropbox IPO shares are priced at $21 — higher than expected

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In a $ 750 million IPO, Dropbox, under its trading name DBX, is set to begin selling tomorrow in an offering that everyone who cares about tech should watch.

Dropbox raised $ 750 million ahead of an opening day of trading on Friday in an IPO that will be closely watched across Silicon Valley to gauge the health of the tech economy.

Investors in the IPO bought Dropbox shares at $ 21.

The cloud storage company on late Thursday disclosed that its shares would list at above that price on the Nasdaq on Friday, the company said. That means it’ll have an opening non-diluted market cap of about $ 8.3 billion — significantly less than the company’s last private valuation of $ 10 billion. How the company fares — not just on opening day but in its first few quarters — should give us some indication on how highly-valued private tech companies can fare on public markets in 2018.

Dropbox originally was only expected to price between $ 16 and $ 18 a share, but strong demand from institutional investors encouraged the company to raise the range by $ 2 to $ 18 to $ 20 per share. Still, it means that without a strong pop, Dropbox could be staring at a downround IPO.

Bankers decided there was enough interest to price it even outside that already-updated range.

Highly valued companies like Dropbox, of course, have been reluctant to go public. Dropbox itself waited a decade. And there’s still a somewhat foul taste in the mouth after Snap and 2017’s other high-profile IPO, Blue Apron, didn’t go so well, leading to market speculation that maybe they IPO’d too early.

This spring will offer an updated portrait. Spotify will begin trading in the first week of April, and that combined with Dropbox is likely to set the IPO tone for the rest of the year.

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Dropbox shares soared today in biggest tech IPO since Snapchat

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Cloud storage and collaboration company Dropbox — which started 10 years ago as a small startup in the San Francisco-based Y Combinator incubator program — went public today, and its shares were up nearly 36 percent as of market close this afternoon. The successful performance makes Dropbox the biggest tech IPO since Snapchat’s in March 2017. Dropbox ended the day of trading, under the ticker symbol “DBX,” with a market valuation of around $ 10 billion.

We knew Dropbox was likely expecting a favorable outcome, considering it priced its shares at $ 21, above its initial projected $ 18 to $ 20 range. But the surge in share price, which helped Dropbox match its last private funding valuation, is a welcomed vote of market confidence for a…

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Dropbox shares jumped nearly 40 percent on the first day of trading

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Dropbox CEO Drew Houston

Dropbox now worth about $ 10 billion — the same as it was at its final private funding round.

Dropbox shares jumped 36 percent in Dropbox’s debut as a public company, ending the day with a market value of about $ 10 billion.

In one of 2018’s marquee tech IPOs, Dropbox’s stock pop showed a high demand for tech IPOs, despite weak performance by some major tech stocks, including an 11 percent decline for Facebook in the past month as revelations of a data scandal erupted last week. That appeared to drag down the industry altogether, with Google and Apple having fallen about 7 percent this month.

Dropbox trading under ticker symbol DBX on the Nasdaq closed the day at about $ 28.50 a share, a significant mark for the company’s later-round investors who bought equity at around that price.

That’s a surprising sign of strength for Dropbox — many observers expected the file-sharing company to not reach the last valuation. And given how many analysts, reporters and other CEOs are closely watching Dropbox’s performance, it theoretically should make people fear public markets a little bit less.

Yesterday, Dropbox stock had priced higher than expected for its IPO, at $ 21 a share. That gave it a non-diluted market cap of about $ 8.3 billion, still below its last private funding round valuation of $ 10 billion.

Now the question is how Dropbox’s stock price will fare in its opening quarters — and once the lock-up ends and insiders are allowed to sell their shares.

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Dropbox IPO is off to a healthy start, valuation soars north of $12 billion

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For a growing company, there’s arguably no day bigger than its initial public offering. After all that work establishing your brand and building up value, it’s finally time for the market to decide what your company is actually worth. Over the years we’ve seen plenty of tech firms take their companies public (with varying degrees of success), and it was just about this time last year when we witnessed Snap start its IPO with a bang—even if today’s price is now below where it started.

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Video: As Dropbox IPO goes live, should you consider switching to iCloud Drive?

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As Dropbox goes public, AppleInsider examines if it is time to consider whether you should stay put with iCloud Drive, or fully embrace Dropbox for your cloud storage needs.
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How Sequoia’s $2 billion Dropbox win became as big as it is

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Sequoia’s Bryan Schreier (left) and Dropbox’s Drew Houston

Here’s how a few investors — Sequoia, Accel and Y Combinator — managed to score huge, even if not equal, paydays.

Dropbox doesn’t have a typical venture capital history.

And that means that Friday — when founder Drew Houston rings the opening bell at the Nasdaq — won’t be a typical IPO celebration for its biggest backer, Sequoia.

It’s an abnormally large win: The marquee venture capital firm owned 25 percent of the company before the IPO. And that percentage reflects a big lesson about Silicon Valley finance: It’s hard to get rich in tech if you aren’t early to a deal.

Sequoia, which as of now is poised to return between $ 2 billion and $ 3 billion on its initial investments, led the company’s first two new financing rounds, out of a total of only four. This means that the firm had less competition from new investors who would dilute its ownership stake. Sequoia also bought shares of the company at a drastically cheaper price than later lead investors — the valuation jump in Dropbox’s early years was wilder than other Silicon Valley darlings.

Those dynamics leads to a funky financial portrait. For example, Accel Partners — which did not lead any round but invested in the company’s Series A financing in 2008, which valued the company at $ 25 million — owns more of the company than Index Ventures, which led Dropbox’s Series B round three years later that valued the company at $ 4 billion, according to the company’s S-1 filing.

But the payday at Accel isn’t without some dispute, which originates with who gets the credit for the Dropbox success story. Sequoia’s lead partner on the company’s seed deal, Sameer Gandhi, left for Accel Partners in the spring of 2008. But a few months later, Sequoia made it a priority to cut Gandhi, now at Accel, into the company’s Series A deal, according to multiple sources with knowledge on the move.

That decision wasn’t nothing: It led to more than a $ 500 million equity stake for Accel.

Other early backers missed out a bit on some winnings: Y Combinator, the influential incubator that has marketed itself in part on birthing Dropbox, sold about half of its holdings to other investors at around the same time as the Series B financing round led by Index, according to a person with knowledge of the deal. This transaction hasn’t previously been reported.

That’s the only time that Y Combinator has ever sold any portfolio company’s shares in a secondary transaction, the person said — the money was directed to help fund Y Combinator operations.

Index, for its part, then had to buy shares at a substantially higher price than Sequoia, Accel and Y Combinator did, albeit with lower risk. Dropbox was so financially successful that it didn’t have to raise money between 2008 and 2011, a three-year gap during which the share price grew to 150 times higher.

Even rapidly-growing companies typically would raise a round — if not multiple rounds — between those share prices. But Sequoia, according to people with knowledge of the process, often told Dropbox in those early years that if the company needed more money, the venture firm could quickly supply the financing without the need for an external fundraising process.

In the eyes of some, the subtext was: We’ll take care of you — so no need to dilute our ownership position.

But Dropbox didn’t need it. Business was booming. Dropbox’s model was so strong and it was growing so rapidly in its early days that it was able to skip those traditional growth rounds — think financings that value a company at the hundreds of millions of dollars — and jump forward to 2011, when it was worth $ 4 billion.

The company would then go onto raise the Index round, a $ 350 million round in 2014 led by Blackrock, and then about $ 1 billion in lines of credit in two batches, the second as recently as last spring.

But Dropbox’s IPO filing earlier this month speaks for itself: This is a Sequoia company.

Sequoia did not start out with an unusually large percentage of the company in an early-stage deal — about 25 percent. But given how cheaply the firm bought into the company, it did not have to aggressively invest in later rounds after 2011 in order to maintain its ownership position. (Accel did participate in some later financing, or pro rata, to make sure it owned enough of the company.)

Sequoia has long had a particularly close relationship with Y Combinator, but Dropbox was not the hottest target among the YC batch of startups. There were competing companies — startups that later floundered like SugarSync promised to do the same thing. But Sequoia saw something in Houston and his co-founder Arash Ferdowsi, two highly-touted MIT engineers.

The company says the first outreach came from Sequoia’s Doug Leone. Also involved was Leone’s co-leader of the U.S. operation, Mike Moritz, who made a now-fabled trip to Houston’s apartment on Russian Hill in San Francisco on a Saturday morning.

“We walked into the Sequoia offices, and on the walls were the original stock certificates of Apple and Cisco,” Houston said in a 2011 interview. “It was daunting. I was thinking, Holy shit, I’m just some kid. What the hell am I doing here?”

Gandhi isn’t mentioned on the Dropbox page on Sequoia’s website. But it was he who later hammered out the terms with Houston over dinner, the CEO has said. Gandhi joined the board, but the Sequoia director seat eventually came to Bryan Schreier, a well-liked former Google sales executive who joined Sequoia in March 2008, a few months before Gandhi would depart for Accel.

Schreier has now served on the board for a decade and is one of Houston’s consiglieres. And he’ll be behind him at the opening bell on Friday morning.

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Dropbox looking to raise over $648 million from IPO, partners with Salesforce

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What Dropbox plans to do with the $ 648 million it will generate in the initial public offering isn’t yet clear.
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Google Cloud integration is coming to Dropbox

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A whole bunch of Google services will soon be easier to use with Dropbox. The company announced today in a blog post that a number of Google’s productivity tools like Gmail, Hangouts Chat, and Google Docs will work with Dropbox much more seamlessly in the near future.

Once the changes are implemented, users will be able to create, edit, and save Google Docs, Sheets, and Slides right from Dropbox, and administrators will be able to manage the files like any others.

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Dropbox looking to raise $500 million as company files for IPO

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For over a decade, Dropbox has been a staple of the cloud storage industry, despite hard competition from larger players like Google and Microsoft. All that time, the company has remained private, but that’s about to change. Dropbox filed to raise $ 500 million in an initial public offering (IPO) yesterday, revealing previously-secret details about the company.

The filing revealed Dropbox had $ 1.11 billion of revenue in 2017, up 31% from 2016.

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Dropbox officially files IPO, cloud service seeking $500 million

Dropbox privately filed for its IPO just last month as the company built expectations for a public offering over the last year. Today, the SEC has publicly revealed the IPO details, offering specifics including last year’s financial performance.

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