Ladies and gentlemen, the first 21st century technology bubble has reached new heights.
Dropbox, a simple yet powerful file hosting service, is in the process of closing between $200 and $300 million in new venture capital, according to TechCrunch. Even more breathtaking: contributors to the round are reportedly valuing Dropbox somewhere between $5 and $10 billion.
At the high end, that valuation makes Dropbox worth only a seventh of Facebook. At the low end, it puts Dropbox in the same league as another social media darling, Twitter, which is also reportedly raising a round of funding that values it at $7 billion.
To date, Dropbox has raised less than $10 million in financing.
We reached out for comment, but the company says it does not comment on rumors.
Doubtless, investors must be impressed by the company’s financials and proven revenue intake, something even the most popular social media sites have struggled to secure. While many of the more than 25 million Dropbox users opt for free 2GB accounts, there must be a solid subset of people who sign up for professional accounts--$10 per month for 50 GB or $20 per month for 100 GB.
In spite of how well financials look for Dropbox and no matter how amazing the service is (it really is), the company could easily suffer from Groupon syndrome. That is, your product and business model aren’t so hard to replicate, so you’re going to be competing with a lot of clones. Already, the space is getting a lot of attention from big tech players like Amazon, who see the media-storing implications of cloud hosting solutions.
A large portion of the new investment in Dropbox would likely be used to aggressively drive user adoption, as a means of ensuring a large and loyal consumer base.
The only investor rumored to be participating is Allen & Company, an investment firm with a significant (though behind-the-scenes) hand in many of the biggest tech industry dealings.
Back in January, the group acted as financial advisor to Groupon’s monstrous $950 million round of funding, which had several major venture capital firms participating. More recently, in the first major wave of social media IPOs, Allen & Co. acted as co-manager to the LinkedIn offering and is a planned underwriter for the upcoming Zynga offering.
The firm has also invested in smaller deals, having led a $7 million Series D for ConnectEDU last year and having participated in a $7.6 million Series A for Personal in January.