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Dropbox IPO Expected To Raise $612 Million

DropboxDropbox Inc. once the most highly valued tech unicorn has seen a drop in its market evaluation. The cloud based platform provider had a market estimate of $10 billion in 2014 but has seen a massive drop in value during the last couple of years. The company is in the process of launching an initial public offering (IPO) and announced terms for its IPO on March 12.

On a fully dilated basis, Dropbox’s valuation is set between $7 billion to $8 billion, which is well below what the company achieved in its last private funding round back in 2014. On a non-diluted basis, Dropbox is valued at $6.7 billion, which will be closer to the price of the company’s market capitalization when it starts trading shares next week.

According to the filing, 36 million Class A shares will be put up for trading and be sold for something between $16 to $18 each. The report states that 27 million of these shares will be issued by Dropbox and the rest will be sold by existing Dropbox investors—including those of its founders, Drew Houston and Arash Ferdowsi.

Bloomberg Technology

Class A shares will only represent 2 percent of the decision-making power in the company as Class B shareholders hold the remaining 98 percent. Class B shareholders include Sequoia Capital, T. Rowe Price and co-founders Houston and Ferdowsi. There are also Class C shares that hold no voting powers but are convertible to Class A shares depending on a share-by- share basis.

In the valuation announcement, Dropbox also confirmed that Salesforce Ventures will be making a $100 million private placement. Salesforce has also previously invested during Dropbox's Series C funding round.

Dropbox Investors Set To Get Richer

Dropbox expects its IPO to reach bring in around $612 million at the midpoint of the range, making it the largest tech offering since Snapchat’s IPO in 2017. This would bring co-founder and CEO Houston’s net worth to $1.6 billion and Sequoia Capital will become $1.5 billion richer. Houston currently owns 25 percent of the company and will now become one of the very small group of tech billionaires that have steered their start-ups all the way to Wall Street.

Currently, Dropbox has more than 500m registered users in 180 countries—11 million of which are paying for storage services. Last year, Dropbox reported revenues of $1.1 billion, which is a 31 percent increase from the previous year. This boost in revenue came after Dropbox started to shift to business customers in a bid to compete with Microsoft, Google, Apple and Amazon.

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