It’s raining money, at least in Los Altos, Calif., that is. Box has reportedly received a $150 million round of funding, which the Wall Street Journal reports will be used to hold the company over until IPO waters get warmer.
This comes only hours after the Enterprise File Synchronization and Sharing (EFSS) vendor was publicly announced as a leader in Gartner’s Magic Quadrant.
The investors, we can now confirm, are TPG Growth, which will appoint a director to Box’s Board of Directors, and Coatue Management, which incidentally just lost an incoming executive to Twitter, where he is now the CFO.
Oh Happy Day
Aaron Levie, Box’s CEO, gave what is probably a heartfelt, boilerplate statement (if anyone can make to two work together, Levie can) about Box’s new funding to the press:
Our mission is to help organizations be more productive, collaborative and competitive by connecting people and their most important information. This focus has been instrumental in building a customer base that includes some of the most influential businesses in the world. We’re excited to work with TPG Growth and Coatue as we continue to aggressively invest in our customers, technology, and future growth.”
Though some say that receiving funding post IPO filing is highly unusual, Rick Heitzmann, managing director at First Mark Capital, told us that it wasn’t necessarily that odd and that it could, in fact, be a smart move.
“Companies want to be able to have healthy balance sheets going into financing,” he said. And while Heitzmann was speaking from a general perspective, the idea is to be in a position where a company (like Box) isn’t desperate for investment.
Assuming that Box is poised for growth, and most of the EFSS sector fits that bill, the funding will help the company continue its rapid growth and spending, the latter of which, as we’ve written before, may be a necessary evil. The time to grab market share is now.
How it All Adds Up
Box has also updated its S-1 – an SEC filing used by companies planning on going public to register their securities with the US Securities and Exchange Commission —with its first quarter numbers.
The updated S-1 document released late this afternoon again shows that Box is bleeding money, only not as badly. Box’s revenue in the first quarter was $45.3 million, up 93.6 percent from last year. Losses were $38.5 million, up 13 percent.
Making more money and losing money at a slower rate is a good thing, right? As long as the situation stays its course.
In any case, both TPG Growth and Coatue Management must think so because they handed Box hefty piles of cash today, so suffice it to say that they’re believers.
Ditto for Box’s current investors who could have urged Box to go public or put itself up for sale right now, so they could cut their losses and run.
They didn’t do that.
It is worth noting, however, that Gartner indicated that potential clients showed some concern around Box’s finances—that’s something that Box has to address. Even if Levie and Box are in a “quiet period” because they filed their IPO.
According to new research released this week and commissioned by CohnReznick LLP, a top ten accounting, tax, and advisory firm, the US is on track to do only 280 corporate IPOs in 2014, far less than the 900 plus IPOs economists estimate are necessary to support broad economic growth.
In the meantime, do you think it’s standing room only Box’s board room? Box will now be courting ten directors, including Levie.