July 31, 2012 / 5:23 PM / 6 years ago

General Atlantic invests $100 million in Box

SAN FRANCISCO (Reuters) - Private equity firm General Atlantic LLC said on Tuesday it has invested $100 million in Box, the fast-growing cloud storage start-up seen as a likely candidate for an initial public offering.

The investment - the third funding round by Box in the last 18 months - valued the company at $1.2 to $1.5 billion, people familiar with the matter said. All told, the latest funding round totaled $125 million, with some of Box’s existing backers joining General Atlantic.

Led by 27-year old founder and CEO Aaron Levie, Box competes with Microsoft Corp’s (MSFT.O) SkyDrive and Google Inc’s (GOOG.O) Drive products to provide businesses with a file storage and workplace collaboration service.

The Mountain View, California-based company has expanded aggressively in recent months as it builds out its sales force, particularly across Europe.

General Atlantic’s investment follows an $81 million funding round led last October by Salesforce.com (CRM.N) and SAP Ventures, the investment arm of European software giant SAP AG (SAPG.DE).

Along with its new stake, General Atlantic, a New York-based private equity firm that manages $17 billion, will also gain a board seat that will be held by Gary Reiner, an operating partner who served as General Electric’s (GE.N) chief information officer until 2010.

In recent months Box has sold to CIOs at major companies like Procter and Gamble (PG.N) as well as small businesses.

Box’s aggressive sales and expansion plans under Levie have raised questions about its rate of expenditures and profit margins. Levie has deflected such concerns by showing enterprise sales figures that have doubled year-over-year.

He told Reuters on Friday that he did not do the latest funding round because Box was strapped for cash. In fact, the company still has half of the previous round - roughly $40 million - still in hand, he said.

General Atlantic Managing Director Brett Rochkind, interviewed alongside Levie, said his firm had been considering acquiring a stake in Box for “many months.”

The infusion of cash will allow Box some flexibility in terms of its IPO timetable, but the company seems to have put those plans on the backburner while it seeks to claim greater market share.

But a public listing remains the most likely outcome, Levie said. The company recently turned down a $700 million cash-and-stock acquisition offer from Citrix Systems (CTXS.O).

“We’re in this window in the next couple years when the leaders of this new market are going to be defined,” Levie said. “We see a once-in-a-lifetime opportunity. That takes a lot of investment.”

Reiner, interviewed along with Levie and Rochkind, said, “It’s a bit of land grab right now, and we’re grabbing it.”

Reporting By Gerry Shih; Editing by David Cowell and Gerald E. McCormick

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