Box.net, The File Sharing and Collaboration Cloud For Businesses, Raises $48 Million
Box.net, the enterprise-oriented file-sharing and collaboration cloud service has raised a combined $48 million in venture capital funding and debt financing. Meritech Capital Partners is leading Box’s Series D round, with Andreessen Horowitz and Emergence Capital Partners joining prior investors Draper Fisher Jurvetson, Scale Venture Partners and US Venture Partners. The round includes $10 million in debt financing from Hercules TGC.
It’s a big shot in the arm for Box, which has 5 million users and saw its revenue grow more than threefold last year, largely on business with 60,000 corporate customers including DreamWorks, Cisco Systems and Dell. Not bad for a company started in a dorm room as college business project.
I asked CEO Aaron Levie–the company started in his dorm room at the University of Southern California–what he’s going to do with all that money. “There’s a pretty significant transition underway from legacy on-premise systems to the cloud,” he says. “Two years ago it was a tool for medium sized businesses, and now we’re seeing much larger companies. Just the technology we have to build to serve those customers takes a lot of investment. We’re also going to invest in our sales team significantly.”
Use of Box.net is so easy–you can start for free sharing pretty much any kind of file–that by the time a company is talking formally to Box.net, it’s already an unofficial customer. “Our plan is to have Box.net surface [from free users] in these organizations, and then we have to sell it,” Levie said.
So why the mix of VC funding and debt? Infrastructure. Box operates two data centers in California and needs more. It can be cheaper to pay for that kind of infrastructure with debt, he said.
George Bischof, managing director at Meritech Capital, said that during the due diligence period before the investment, all the lawyers and investors involved had to use Box.net to give it a thorough going-over. “That was sort of the ultimate litmus test for simplicity if the lawyers and investors can use it well,” Bischof said.
Box.net sees itself as a rival to Microsoft’s Sharepoint, and threw down the gauntlet pretty hard in 2009 when it launched a bake-off challenge and handed out T-shirts declaring Sharepoint to be “Sharepoo.” Nothing grabs attention like starting a fight.
So does Levie want to take Box public? Sure, he says, but he’s in no hurry. “Now that we’re selling to larger companies, there’s actually a strategic reason to go public. Large public companies tend to more easily trust other public companies with their IT, so it turns out to be a competitive advantage. But it’s a few years out for us.”