Is Dropbox worth $8 billion? Tech valuations hit nosebleed levels

SAN FRANCISCO -- Valuations being given to the most promising of the latest crop of Internet companies just keep going up and up as investors open their wallets ever wider.

Dropbox, which has already raised hundreds of millions, plans to raise even more: $250 million more to be precise, at a nosebleed valuation of $8 billion, according to published reports.

For those keeping track, that’s more than double its last funding round that valued the company at $4 billion.

And bear this in mind: tech financiers are willing to throw that kind of cash and that kind of valuation at the 5-year-old online storage service even though its revenue growth is slowing down.

The San Francisco start-up, which says it has 200 million users and reportedly will have sales of $200 million this year, announced last week that it’s making a major –- and costly -- play for the business market in hopes of kick-starting revenue growth again. It’s playing catch-up with technology giants such as Google and is looking to compete with rival start-up Box which has been focused on that market for years.


“Dropbox has continued and strong momentum,” the company said in an emailed statement.

The $1-billion valuation club in Silicon Valley used to be fairly exclusive. Now a growing number of start-ups –- many of which have no business model or at best a fledgling one –- sport multibillion-dollar valuations, giving some people dot-com déjà vu.

“I thought I was keeping up with the Joneses,” joked Dave Goldberg, chief executive of SurveyMonkey, which raised $800 million earlier this year at a valuation of $1.35 billion.

“I think what we are seeing here is certainly some frothiness in valuations of Internet companies,” Goldberg said in an interview last week. “But on the other hand, we are seeing that these are global businesses being built very quickly at scale. That is very different than 13 or 14 years ago. It doesn’t mean all of these companies will be successful, but if they are successful, the scale will be so much greater than what was imaginable in the first bubble.”

Still, not all of these high fliers will come out on top, he said.

“Some of them are going to crash and burn,” Goldberg said.


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