Cloud storage platform Box.net has raised $81 million in Series D funding from strategic investors Salesforce.com and SAP Ventures with Bessemer Venture Partners, NEA, and prior investors including Andreessen Horowitz and Draper Fisher Jurvetson Growth participating in the round. The new investment brings Box’s total capital raised to $162 million (the $50 million round we reported on a few weeks ago is part of this D round). We’ve heard from sources close to the company that the Box’s valuation was above $600 million.
Box, which has 7 million users and stores over 300 million documents, is a cloud storage platform for the enterprise that comes with collaboration, social and mobile functionality. Box has evolved into more than just a fils storage platform, and has become a full-fledged collaborative application where businesses can actually communicate about document updates, sync files remotely, and even add features from Salesforce, Google Apps, NetSuite, Yammer and others.
The company was founded in 2005 by Aaron Levie and Dylan Smith out of their dorm rooms in 2005 with the goal of making it easy for people to access and share all their content, from anywhere. Today, the company provides storage solutions for 77% of the Fortune 500. Currently, 100,000 businesses are using Box’s service with 250,000 new users joining each month. This year, Box landed its biggest enterprise deal yet (and one of the largest cloud SaaS deals ever) with 18,000 seats with P&G.
Josh Stein, managing director of Draper Fisher Jurvetson, was an early believer of Box back in 2006. He says that two things stood out then that showed that the idea born out of Levie and Smith’s dorm room had potential. First, he explains Smith and Levie had one of the best work ethics he’d seen.
He recalled that when the firm would ask Levie and Smith questions about the product and business, the two fledgling entrepreneurs at the time would respond with thoughtful several page emails at all hours of the day. And second, the quality of the early product, which at that point was aimed at the consumer as well as businesses, was intuitive, well-designed and had a valuable functionality.
So why has Box been able to scale from an idea in a dorm room to a nearly billion dollar business? Stein says that Box’s cloud storage platform is a ‘terrific product’ that meets needs for variety of industries. He says that in the past few years, Box has created a new category in enterprise products of what the company intranet could have become.
NEA partner Kittu Kolluri agrees with Stein that Box has become an extension of the intranet, but adds that Box has also become a next generation extranet, as Box allows companies to share files and communicate with clients outside of the company.
Kolluri also highlights the growing trend of the consumerization of IT. He said that NEA looked at a few other companies in the enterprise storage and collaboration space but Box had the most compelling solution that offered enterprises both security as well as ease of use.
And because of its compelling product, growing revenue and strong user base, the company has even become a pricey acquisition target, receiving acquisition offers of $500 million. Kolluri says it was a smart decision for Box to turn these acquisitions down (NEA invested after these acquisitions were rejected). And Kolluri wholeheartedly believes that Box can and will be a public company.
Stein also believes in Box’s potential strength in the public markets. “Box absolutely should be a public company,” he says and confirms that an offering is in the company’s future plans. Stein says that as an SaaS company, Box’s recurring revenue model makes it an ideal public company. Of course, raising this growth round gives Box the flexibility of when they want to enter the public markets, adds Stein.
Levie hasn’t planned on raising additional funds this year after picking up $48 million from Andreessen Horowitz and others earlier this year but because of the strong venture market, the company’s strong performance, and the growth in the cloud, an expansion round made sense.
“There’s so much change taking place in the enterprise, and we’re trying to build out go-to platform for how people use data, work, and collaborate,” Levie explains. Part of this is taking on more established enterpruse players like Microsoft. “We’re redefining how enterprises share and manage content on Box, while also building a powerful, open ecosystem of partners and developers to help our customers get more value and flexibility from their information than ever before possible.”
Part of this is creating an ecosystem around the platform. In November, Box plans to launch the Box Innovation Network, which will provide funding, consulting and other resources to developers building off of Box. Today, Box integrates with 120 applications, including leading cloud solutions including Salesforce, SAP StreamWork, Google Apps and NetSuite.
Box plans to use the new funding for product development, international expansion, and to further build out its infrastructure in the U.S., opening a third data center in 2012.
Of course, with this expansion will come challenges, says Stein. Growing fast can put strain on an organization. Box has rapidly scaled its team from 125 to nearly 300 employees in 2011 to date, including key senior hires from companies such as Cisco, EMC, Microsoft, NetSuite, and Oracle. Of course these executives has experience with high-growth companies and can help the company innovate while continuing to grow.
As far as strategic partners go, Salesforce and SAP are interesting choices. Salesforce, in particular, as a partner makes sense says Levie considering both of the company’s bets in the cloud. Box will be debuting integrations with Salesforce’s social network for the enterprise Chatter, and will continue to roll out deeper integrations in the future. And Levie says that most of Box’s customers user Salesforce as well.
“Box is helping organizations make better decisions faster by bringing new innovation to business information,” said Jai Das, managing director, SAP Ventures. “As an investor and partner, we’re excited about how Box is reinventing content management and collaboration, and look forward to working with them to make customers more productive.”
In the end, we want no more limits for businesses, says Levie. But he knows that to do this Box needs to innovate fast. “Steve Jobs reminded us of challenges of time,” he explains. “We’re trying to make the best use of our time and do a large amount of things rapidly. The ability to capitalize on this growth in the cloud is dependent on how quickly we can go to market.”
We can definitely expect more products and features coming out of Box in the next few months. And clearly, we could also see a public offering as soon as next year. 2012 should be an interesting year for the cloud storage company.
Checkout our recent video with Levie below.