Web Start-Ups Get Upper Hand Over Investors

As venture capitalists scramble to get a piece of Silicon Valley’s new Web boom, entrepreneurs like Aaron Levie are finding they have the upper hand.

Mr. Levie, 26 years old, founded online storage provider Box.net in 2005. While his 140-person Palo Alto, Calif., company has money in the bank, Mr. Levie saw the Web investing environment heat up recently, driven by interest in fast-growing start-ups such as Facebook Inc. and Zynga Inc.

So Mr. Levie decided to tap that interest and raise new capital. In less than three weeks last month, he closed a hefty $48 million round of financing from venture-capital firms including Meritech Capital Partners and Andreessen Horowitz. In the process, Mr. Levie said he turned down several other venture firms that wanted a piece of the deal.

“There was no capital limit and we could’ve raised more,” said Mr. Levie, whose start-up counts about five million users at 60,000 companies.

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