With this bold move, Dropbox is testing the U.S. primary market which of late has seen a lull. Its IPO will be the biggest, from the tech sector, following Snap Inc’s IPO earlier this year.
Sources familiar with the matter at hand have disclosed that data-sharing business service provider, Dropbox Inc, is looking to hire underwriters for its upcoming initial public offering (IPO), scheduled for later this year.
This will be the biggest IPO U.S. tech sector company to hit the IPO market after Snap Inc, said the sources.
The upcoming IPO is likely to be a key test for Dropbox, after it was valued at nearly $10 billion in a private fundraising round in 2014.
According to the sources, in the coming weeks, the company is set to begin interviewing investment banks.
The sources preferred the cover of anonymity since the deliberations are still private.
Dropbox declined to comment.
Founded in 2007 by MIT graduates Drew Houston and Arash Ferdowsi, counts Sequoia Capital, T. Rowe Price and Greylock Partners as investors, San Francisco-based Dropbox’s IPO could assume significance since several big U.S. technology companies, including Airbnb Inc and Uber Technologies Inc have avoided the primary market out of concerns that investors would assign lower values to them.
Earlier this year, Snap, the owner of Snapchat, a popular messaging app, was forced to lower its IPO valuation expectations midst investor concern over its unproven business model.
Since then, its shares have hovered just above its IPO price, with investors unhappy about its widening losses and missing revenue target of analyst’s estimates.
Snap has a market capitalization of $21 billion.
In 2015, Dropbox’s main competitor, Box Inc had been valued at around $1.67 billion in its IPO, less than the $2.4 billion it had been valued at in previous private fundraising rounds.
The company began its operations as a free service for consumers who could store and share their large files, including, photos and music, the business soon became commoditized when Google, Amazon.com and Microsoft) started offering free storage services as well.
Since then Dropbox has focussed on wining over business clients and as per its CEO, the company is well on its way of generating more than $1 billion in revenues this year.