Decoding Dropbox’s Value Ahead Of Its IPO

Morning Report: Let’s take another look at Dropbox’s value through the prism of secondary transactions.

After news broke that Dropbox had privately filed to go public, we took a swing at what it figuring out what it might be worth at the time of its debut.

The short answer was that the popular file sharing and productivity company probably wouldn’t reach the $10 billion mark, given what we know about its revenue, growth, and profitability. Dropbox famously picked up a $10 billion price tag during an equity financing event in 2014.

But public market comps are only so good, as companies are only so analogous. In that vein, The Information has some useful notes out today that we need to consider. In short, they detail what investors are willing to pay for Dropbox stock ahead of its IPO.

Regarding Dropbox’s current private valuation, as divined through the illiquid, private market, here is the gist:

A few secondary market transactions also have valued Dropbox below $10 billion, though trades show that the company has begun to recover from the public beating it took in 2015 over concerns it was growing at an unsustainable rate. Bidding interest is increasing, brokers said, with prices in the range of $13 to $15 per share, equivalent to a $7 billion to $8 billion valuation.

The $7 billion to $8 billion range caught our eye as it lands precisely where we wound up valuing Dropbox using publicly available data. To wit: “Having done all that [work to come up with a valuation number], we can gist out that Dropbox, at a $1.3 billion ARR pace, would be worth $7.5 billion.”

To be completely frank, if we can noodle that number out before our second coffee, real market kids are getting a more precise figure before their commute. So it could be that there is some general expected consensus regarding Dropbox’s potential public value.

Of course, until we know its gross margin direction, the growth of its enterprise business, revenue mix, and a host of other numbers, everyone is guessing.

From The Crunchbase Daily:

Tencent, Alibaba-backed rounds continue surge

• Tencent and Alibaba are playing an increasingly weighty role in China’s startup ecosystem. The two companies have participated in more than 400 known funding rounds over the years, a Crunchbase News analysis finds, with activity levels hitting an all-time high in 2017.

Uber buys food delivery service Ando

• Uber wants to make its own food. That, apparently, is the logic behind the company’s newest acquisition, of Ando, a delivery-only prepared food startup launched two years ago by a prominent New York restaurant entrepreneur. The ride-hailing giant plans to integrate Ando into its Uber Eats platform.

Snow raises $50M for selfies

• Snow, developer of a popular app for embellishing selfies, has reportedly raised $50 million in fresh funding from SoftBank and Sequoia China. Launched as a standalone startup in 2016, Korea-based Snow was started by Naver, the firm behind the messaging app Line.

New York heats up as fintech hub

• It’s been a strong start to 2018 for New York City’s burgeoning fintech scene, with sizable rounds for alternative credit card issuer Petal and personal finance platform MoneyLion. Industry insiders predict the momentum will continue.