Dropbox (Editor Rating: ) has obtained another round of funding – this time $500 million in credit. Earlier today, The Financial Times reported that the San Francisco based leading cloud storage provider is on a borrowing spree. While TechCrunch still awaits an official confirmation of The Financial Time’s report, from Dropbox, online magazine re/code has confirmed the development citing sources close to the situation.
News of the credit facility comes shortly after a round of equity funding. Earlier this year, in a similar move, Dropbox raised $350 million from venture capital and private equity investors. The company never confirmed the round, but a regulatory filing disclosed the details.
While the business world is speculating about their funding moves, Dropbox maintains an eerie silence on them. However, an upcoming press event might offer some insight into their larger plans. On April 9, the blue box is expected to launch new products and make other announcements.
Decoding Dropbox’s Funding Strategy
Two theories have emerged to explain the recent moves. The first theory believes that Dropbox always needed funds to realize their growth plans. In between, the business environment in cloud storage turned very competitive. Exemplified by Google’s recently announced 68% slashing of storage prices. The move has a direct impact on the revenue stream of other storage companies, including Dropbox. In such circumstances, Dropbox needs even more money to realize its plans, and hence multiple rounds of funding.
The second theory relates to the funding of Dropbox’s ‘still awaited’ IPO plans. The Financial Times suspects that DropBox is not yet ready for an IPO. The report says:
“Dropbox is unlikely to move forward with an IPO until next year, said one person familiar with the company.”
Therefore, instead of waiting for an IPO, Dropbox is taking alternate routes to arrange for funds.
Other Recent Moves From Dropbox
Dropbox provides online storage services to more than 200m personal users. In addition, they serve more than 4 million business customers. In a changing business environment, they are relying on business accounts for increased revenues and growth. In the last couple of months, they’ve acquired companies Zulip and Readmill, opened new offices, and strengthened existing ones.
Is Dropbox doing the right thing by remaining silent on its funding? Please let us know your thoughts in the comments section below.