Arik Hesseldahl

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Box Raises $125 Million Growth Round Led by General Atlantic

The reports that Box, the cloud-based enterprise file-sharing and collaboration service that’s been growing like the mythical beanstalk in Jack’s back yard, has been raising capital again are true. Today, the company will announce that it has landed a massive $125 million round of funding led by growth investment fund General Atlantic.

As part of the deal, Gary Reiner — the former CIO of General Electric and an operating partner at GA, who’s also a director at Hewlett-Packard — will join Box’s board. Also joining the round as a new investor is the Social+Capital Partnership.

Sources familiar with the company’s efforts tell AllThingsD that there are at least two other institutional investors taking part in the round, but those firms are, for now, not being named, though they’ll be revealed in regulatory filings soon. In taking institutional investments, as part of a late-stage investment, Box is following a variant of the strategy that companies like Facebook and Workday have followed on the path to an initial public offering, which Box is considering for sometime in 2013.

The Wall Street Journal reported last week that Box was raising funds at an implied valuation of $1.2 billion, and sources familiar with the terms of the deal confirmed that such a valuation estimate is right on target.

The investment brings Box’s total capital raised so far to about $285 million. In fact it’s been less than a year since Box took an $81 million strategic investment round from Salesforce.com and SAP Ventures with several venture capital funds including New Enterprise Associates and Bessemer Venture Partners. Box has proven one of the more popular plays for venture capitalists in the last few years, and its roster of backers runs the gamut of Sand Hill Road’s bigger names: Andreessen Horowitz, Draper Fisher Jurvetson, Emergence Capital Partners, Meritech Capital Partners, Scale Venture Partners and US Venture Partners are all investors.

But ask Aaron Levie about an IPO, and he’s quick to demur. “We can do way more as a private company than we can as a public company,” he says. “Taking this round gives us the foundation to build the foundation we need.”

By VC standards, $125 million is a sizable deal, but Reiner told me it’s about an average-sized deal for General Atlantic. “We invest about $2 billion a year,” Reiner told me, “and do about a deal a month,” in sizes ranging from $50 million to $500 million, but averaging about $150 million each. The firm’s investments have included stakes in Alibaba Group, Facebook, Gilt Group, and ServiceSource.

And there’s no question that Box is growing. Just last month, it announced plans to expand into Europe, disclosed that it had hired Stefan Apitz away from LinkedIn as its VP of operations, and talked about a new data center in Las Vegas. And in March, it took its exploding batch of employees — now 500 strong — to new headquarters in Los Altos, Calif.

What’s interesting about Reiner leading this investment and taking a seat on Box’s board is the fact that he was for years the CIO at GE, and as such was once the very kind of person who you might have expected to be suspicious of the cloud’s value to large enterprises.

I asked him to put his old CIO hat back on for a moment and consider how he might have seen Box years ago. “The biggest concern a CIO has is about important documents being stored outside the firewall,” Reiner told me. “But the fact is that almost every large enterprise has been broken into, and every CIO has been humbled regarding how tought it is to secure your own environment. But the fear of trusting a cloud service is a lot less now than it was about four or five years ago.”

Rather than fight the constant losing battle to keep the bad guys out, better to let someone whose reputation depends on security develop a service specifically for sharing files across a company or with partners.

At GE, Reiner oversaw the building of an internally-built file sharing network that did a lot of the same things Box does, but without anywhere near as many features. “We couldn’t find someone to build it for us, so we built our own, and it quickly became critical to the heartbeat of the company,” he said. “It had a lot of the same functionality but its user experience was nothing like Box.”

I asked Reiner what he thinks about the timetable for a Box IPO. His answer: “Who knows? … All we want to do is help,” he told me. “The goal is to provide the best business guidance that we can.” There will be time to talk about IPOs sooner or later.


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