Enterprise software producer Salesforce has agreed to invest $100m in US-based file sharing service Dropbox alongside an initial public offering that would raise $648m at the top of its range.
Dropbox set the terms for the offering yesterday and plans to issue 36 million shares priced between $16 and $18. It would value the company at up to $7.05bn, a drop from the $10bn valuation it commanded when it last raised funding in 2014.
Founded in 2007, Dropbox has created a cloud-based offering that allows users to store files and share them with others for collaborative purposes. It has a subscriber base of roughly 11 million out of 500 million registered users.
The company has raised more than $600m in equity financing and $1.1bn in debt, with Allen & Company, Goldman Sachs and Morgan Stanley, Sequoia Capital, BlackRock and T. Rowe Price having contributed to the 2014 round, in which Dropbox received $350m.
Earlier Dropbox backers include Salesforce’s corporate venturing unit, Salesforce Ventures, which has not disclosed when it invested, as well as Benchmark, Greylock Partners, Index Ventures, Institutional Venture Partners, RIT Capital Partners and Valiant Capital Partners.
Salesforce Ventures, has agreed to invest $100m in the company through a private placement that will take place concurrently to the IPO, but the filing does not reveal the size of the stake it currently holds.
The investment will follow the announcement of a strategic partnership on Friday that will allow users to create custom, branded Dropbox folders using Salesforce’s Commerce Cloud and Marketing Cloud platforms, and access Dropbox-stored documents on Salesforce’s Quip collaboration platform.
Venture capital firm Sequoia is Dropbox’s largest shareholder but its stake will be diluted from 23.2% to 21.1% once the IPO and private placement have closed. Accel’s will be cut from 5% to 4.5%, and T. Rowe Price’s from 3.5% to 3.2%.
The IPO’s underwriters are Goldman Sachs, JP Morgan Securities, Deutsche Bank Securities, Allen & Company, Merrill Lynch, Pierce, Fenner & Smith, RBC Capital Markets, Jefferies, Macquarie Capital, Canaccord Genuity, JMP Securities, KeyBanc Capital Markets and Piper Jaffray.
The banks will have a 30-day option to buy an additional 5.4 million shares, which could potentially boost the size of the offering to approximately $745m.