Dropbox Secures $600M Credit Line
Dina Bass and Alex Barinka (Hacker News):
Dropbox has said it’s not in a hurry to go public and that the business is nearing profitability. The company is cash-flow positive, with annualized revenue of more than $1 billion, Chief Executive Officer Drew Houston said last summer. Dropbox could tap debt if it wants to expand more aggressively or make acquisitions, said one of the people. It never touched a smaller credit facility, which was expiring, the person said.
After opening up in 2007, Dropbox gained a loyal following from people looking to store photos and other files in the cloud, making them available from any computer or mobile device. It rode this wave to a $10 billion valuation in early 2014, vaulting it to become one of Silicon Valley’s most valuable unicorn startups.
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Dropbox has shifted to focus on selling its cloud service to larger businesses, which has helped boost revenue. It has also cut costs, partly by building data centers instead of relying on Amazon.com Inc.’s cloud storage.
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For the banks involved, taking on the risk of lending to an unprofitable private company can help them win a role underwriting an eventual IPO.
A company with a modest valuation can survive by doing one thing and doing it well.
A company with a very large valuation needs either very large sales figures OR large growth potential. Dropbox is squarely in the second category, which is why they need to keep expanding.
Dropbox is an interesting case where entire market window for the service could close before they ever had a chance to make real money.
