Boxworks: Box COO Says Private Funding Will Boost IPO

Box COO Dan Levin believes the reported $150 million (£93m) it recently raised in private funding will inspire confidence in potential investors when the company finally goes public.

The cloud firm submitted an S-1 filing, a document that must be completed by all firms in the US wishing to list publicly, with the Security and Exchange Commission (SEC) earlier this year and it was believed a flotation would take place shortly after.

As yet, an initial public offering (IPO) has not materialised and the additional funding round is unusual for a company about to go public. However speaking at Boxworks 2014 in San Francisco, Levin reiterated the company’s commitment to an IPO and believes the extra capital will be useful in a market more wary of tech firms.

Box IPO latest

“We were a little unfortunate with the timing of the unveiling of our S-1 in late March, but we continue to be very pleased with the performance of the business,” he told TechWeekEurope. “We continue to feel that the credibility and visibility of being a listed company is important for an enterprise software company and it’s a path we’re on.”

Levin explained that the public’s appetite for rapidly growing technology companies investing heavily in their businesses was “pretty high” with “historically high valuations” for firms like ServiceNow and Palo Alto networks. However he said there as a correction to this demand in the spring and Box felt like it needed to do something to ease any fears.

“We felt that it was appropriate for us to make a statement to the public markets that our business model was fully funded, that we could get to cash flow break even without raising any more money,” he said. “The easiest way for us to that was to take a private round. I think of it as splitting the IPO in half: part of it private and we’ll take the rest publicly when the time comes.

“Now, we have plenty of money in the bank to be fully funded to cash-flow break even. No public market needs to worry that we need to raise money and our customers are employees have the security of knowing we have a lot of money in our bank.”

Marketing spend

Box’s S-1 revealed some interesting figures, not least that it spent $171.2 million on marketing during the previous fiscal year, contributing to losses of $168.6 million. Levin said this marketing spend is absolutely essential if it wants to grow quickly enough to become the market leader.

He added that revenues were up 94 percent year-on-year during the first quarter and net retention rates were strong. He admitted that the amount it spent on marketing in relation to its revenue would come down, and has done already, but said he was confident the business would be profitable in the long run.

There is still no firm date for Box’s long awaited IPO and Levin said he was in no position to give a clearer idea.

“I can’t really say much other than we continue to believe Box will be and should be a public company at an appropriate time,” he said.

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