Box to tap cloud demand as it files for IPO

Richard Waters and Arash Massoudi

Box, a Silicon Valley start-up that sells a cloud-based document sharing service to businesses, has filed for an initial public offering likely to value it at more than $2 billion, according to two people familiar with the situation.

The move puts the nine-year-old company on course to join a spate of tech IPOs expected later this year as start-ups rush to take advantage of soaring stock market valuations for cloud, mobile and social media companies.

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Box was valued at $2 billion by its most recent round of fundraising late last year, though strong demand from IPO investors has pushed some recent new issues well above their private market valuations.

The filing was made under a provision of a recent US securities reform act which allows companies with revenues of less than $1 billion to keep the process confidential until close to the time of a public share sale, according to the people familiar with the company. Twitter used the same process to keep its own IPO plans private until close to the time of its share sale last autumn.

Chief executive Aaron Levie has repeatedly signaled that he was likely to pursue an IPO this year and an early filing for 2014 was expected due to the company's need for cash.

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Box has already raised more than $400 million from venture capitalists and private equity firms as it races to stake out a position in the market for online storage and collaboration against industry giants such as Google and Microsoft.

Because of an approach that relies on heavy sales and marketing spending to attract new customers – in common with other cloud companies that sell to businesses – Box has developed a far greater need for cash than Dropbox, a similar company aimed primarily at consumers.

Dropbox, which has also shifted its attention to the business market and is expected to pursue an IPO of its own later this year, was valued at $10 billion in its most recent fundraising round last December.

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Box has hired Morgan Stanley, Credit Suisse and JPMorgan Chase to lead the share sale, according to the people familiar with its plans.

The company said: "We don't have anything to share at this time. We're focused on continuing to build our business and expand our customer relationships globally."