Box just surprisingly raised $150 million but still intends to go public this year

Finding funding.
Finding funding.
Image: Reuters/Stephen Lam
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Box has raised $150 million in capital from private equity firm TPG Capital and hedge fund Coatue Management, the company announced today.

The file-sharing startup had officially filed to take itself public back in March. But the market for tech IPOs had cooled, and Box was reassessing the optimal timing for its IPO, sources have said.

This latest capital injection—which values the Silicon Valley startup at about $2.4 billion, according to the Wall Street Journal—does not mean that it is abandoning plans to go public. It does mean that Box may not launch its IPO until this fall, later than it had originally hoped, the Journal reports.

“Our plan continues to be to go public when it makes the most sense for Box and the market. As always, investing in our customers, technology, and future growth remains our top priority. TPG and Coatue have great track records with growth companies like Box and we’re excited to work with them as we execute on our strategy,” a Box spokeswoman said via email, declining to comment further on the details.

Box, run by CEO Aaron Levie, had been fielding offers from private investors to launch another round of private funding, sources told Quartz back in June—though other sources had said an IPO was on track for the coming weeks. Re/Code reported in June that Box was on track to go public.

There are a few reasons why Box may be raising money now, ahead of its IPO–an unusual thing for a company to do after having filed with regulators to go public:

  • Perhaps the most significant is that Box has been burning through cash to build its cloud-computing services. That likely means the company’s $150 million cash infusion from TPG and Coatue could satisfy its need for additional funding as it heads toward an IPO.
  • Raising cash also bolsters Box’s valuation, or at least sets a new floor. There had been some concerns among investors that Box might not command in an IPO the roughly $2 billion it had been valued at in an earlier funding round.

We don’t know the specific terms of the TPG/Coatue investment, but it’s likely the extra cash was not cheap. Typically the terms of such investments do a lot to protect the late-stage investors from losing money—so it’s not an ideal scenario just ahead of your IPO unless you really need the cash.

The market for tech IPOs has actually been more favorable of late. Security-software company MobileIron gained 22.4% in first-day trading after its June IPO and sports camera company GoPro enjoyed a similar 30% pop. Further delays for a Box IPO suggest the company and its investors are regrouping about how to best woo IPO investors.