US-based online file sharing company Box has been on a tear, and this means two corporates are likely to be getting the champagne ready.
Last year, Box was reportedly valued at $600m after an $81m series D round in October, with US-based cloud computing company Salesforce and SAP Ventures, the corporate venturing unit of the eponymous Germany-based software company, being revealed as strategic investors. Now news provider Wall Street Journal reports Box is discussing a valuation of $1.2bn with its investors for a new round of funding.
The deal has been gratifying in a short time for those involved. Jai Das, a managing director at SAP Ventures, who declined to comment on the fundraising, said: “This is a company which is doing fabulously. It is growing in a fashion I have seen in very few companies and we are financially very happy with its performance. The business is beating its plan every quarter.”
Such growth could see as much as a five times return on the two companies’ investments if the company can meet expectations of a $2bn to $3bn valuation mooted for its initial public offering next year, according to the Wall Street Journal.
The deal also appears to be a victory for the corporates adopting a venturing strategy. Had they attempted to buy it, it is likely they would have failed, at least without a very big offer. US-based technology company Citrix Systems was reported to be looking to acquire the company for at least $700m, and was turned down last year.
Most importantly, Box is very well positioned in a segment of the market, which is rapidly growing in importance (disclosure: we use peer Dropbox’s system at Global Corporate Venturing), and in need of large amounts of storage capacity: mobile. Aaron Levie, chief executive of Box, told news provider TechCrunch last week, 40% of Box users use it on mobiles.
He reportedly said: “We see a huge correlation between users adopting mobile, and users adopting Box.” It is thought in technology circles that Box is a good file sharing tool to please both consumers and business technology departments, due in part to a focus on security.
Also strategically the company could well be a winner for both Salesforce and SAP. Salesforce appears to have tied itself strongly with the company. Box’s marketing puts it thus: “Salesforce.com is a leader in CRM [customer relationship management] software, and in combination with Box, it has become even more useful.”
The deal with SAP is likely to get interesting. For while SAP Ventures has a financial returns-first focus and there has been no big strategic announcement, it would be fair to assume that SAP would look to tie up its big presence in mobile via its Sybase subsidiary with Box.
Further down the line, tie-ups with SAP’s SuccessFactors and Ariba could be on the cards, after the Germany-based company made the two multi-billion dollar cloud acquisitions.
Watch this space, and watch this company for delivery of potentially stellar returns for the corporate backers as well as strategic insights into the cloud revolution.