Dropbox submitted a confidential application for their US IPO this week, according to sources familiar with the matter. The unnamed informants disclosed that Dropbox is allegedly looking to list in 1H’18. Goldman Sachs and JP Morgan are reportedly Global Coordinators on the IPO, with other syndicated bookrunners yet to be announced. Wall Street and other tech companies aspiring to an IPO will be closely analyzing the stock performance of the file-sharing company, as it will likely set an important precedent for other large, profitable SaaS companies trying to list in 2018. Dropbox reached its $10 billion private valuation back in 2014, sparking experts to wonder why they delayed listing for so long and is reportedly currently free cash flow-positive and profitable on an EBITDA basis. Dropbox is the second major tech company to file for an IPO this year, following Spotify’s similarly confidential application to list in early January.
Elsewhere in the software world, leading provider of SaaS analytics ChartMogul announced several new product updates, including a filter to analyze a range of MRR, the ability to compare multiple segments anywhere in the platform, and chart animations when switching between time intervals. The new features are available immediately to new and current users.
In VC news, Sequoia Capital has announced this week that they have just closed on a $180 million new fund called Sequoia Scout III, which will focus exclusively on seed-stage opportunities, all consolidated into a single fund (a departure from their previous seed strategy).
Machine learning has also been in the news this week, with Google announcing their launch of AutoML, a machine learning tool for helping developers build custom image recognition models. The program would enable developers with no machine learning expertise whatsoever to build custom learning models that would allow search functions to recognize and search by the likeness of an image, rather than rely on tags and descriptions. Companies like Clarif.ai and Microsoft have been rumored to be working on similar technology, likely due to the high demand for machine learning experts and data scientists and the correspondingly low supply.
After months of speculation, Amazon has revealed a major step towards their decision of where to base their new headquarters. A list of 20 cities was recently released by the company, showing some expected contenders, as well as a few unexpected ones. Notable cities include: Boston (our home base!), New York, LA, Miami, and Toronto. Of the narrowing down process, Holly Sullivan of Amazon’s Public Policy department said, “Getting from 238 to 20 was very tough. All the proposals showed tremendous enthusiasm and creativity. Through this process we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation.” For the full list, read more here.
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In conference news, Founder Thomas Smale attended the North American Bitcoin Conference in Miami yesterday and today where he had the chance to hear industry pioneers like Patrick Byrne, CEO of Overstock and tZERO, speak and get their insights on what we can expect from this evolving industry. He also had the chance to meet up with several of our clients to learn what their focus will be on in the upcoming year. Up next is SaaStr Annual, February 6-8 in San Francisco, CA. He still has a few slots open for meetings, so shoot us a reply if you are attending or will be in the local area and would like to meet up. Be sure to mark your calendars for our next Boston E-Commerce Meetup on Wednesday, January 31 at WeWork South Station from 6-8pm! The panel topic will be “Best Ad Strategies for E-Commerce Businesses”, so keep an eye out for our list of expert panelists in the coming weeks. In the meantime, you can subscribe to the meetup here.
Continue reading below for more on Dropbox’s application for IPO, Sequoia Capital’s new fund, Google’s launch of AutoML and the People’s Bank of China calling for a ban on cryptocurrency trading activities.
Deal Highlights
New:
E-Commerce – Dropship Footwear & Apparel – $106K gross/mo
- Strong supplier relationships creating a competitive advantage
- Rapid revenue growth, reaching c.346% YoY growth for the period 2016 to (e)2017
- Diversified product base with hundreds of profitable SKUs
- High gross margin averaging c.22% over the trailing 12 months
- Low owner involvement with much of the day-to-day outsourced to VAs
Yearly net profit: $224,000
Asking price: $528,000
Sold:
Affiliate – Health & Wellness – $12K gross/mo
Affiliate – Pet Care – $3.8K gross/mo
Affiliate – Wedding Registry – $2.1K gross/mo
SaaS – Home & Event Décor – $1.7K MRR
In the News…
Dropbox Files for US IPO Confidentially
Dropbox has reportedly filed confidentially for a U.S. Initial Public Offering, valued at $10 billion.
Recently, it became known that the company would be filing to list this year, and people familiar with the matter say Dropbox is cash-flow positive and profitable on an EBITDA basis. Unlike Dropbox, Snapchat, for example filed as an unprofitable social media company. Indeed, Dropbox will be approaching listing with more than $1 billion in annualized sales, according to CEO Drew Houston in an interview last year. According to Houston, the profitability of the company is due to more than two years of focusing the company, expanding its product suite for businesses and cutting down on expenses. This makes Dropbox one of several large tech companies preparing to go public in the U.S. in 2018, among Apollo Global Management’s security company ADT Inc., as well as Spotify.
Experts believe that Dropbox will have to prove how it’s different from other file sharing collaboration tools like Google, Microsoft, etc.
Sequoia Capital Closes on New $180 million New Fund
Sequoia Capital, the top-tier venture firm, has just closed on a $180 million new fund called Sequoia Scout III focusing exclusively on seed-stage opportunity startups.
From an interview with TechCrunch, Sequioa Partner Bryan Schreier (who also happens to sit on the board of Dropbox) said, “…we have a long-standing seed practice at Sequoia, going back to the very beginning, and this new fund just represents the consolidation of our seed program into a single fund. As with Airbnb, Dropbox and Stripe, we’ll be looking for seed investments that we’ll be investing in directly. We’ll also be [relying on Sequoia’s network of more than 100] scouts, who come from the Sequoia network [and who are mostly] founders and execs.” A vast majority of investors will be non-profits, meaning that when companies backed by the fund have large gains, the benefits circle back to supporting nonprofits.
Schreier stated in the interview that Sequoia has had their best luck investing in ideas backed by successful entrepreneurs.
People’s Bank of China Calls to Shut Down Cryptotrading Activity
A senior official in the People’s Bank of China has called for a wider ban on cryptocurrency trading services in China.
The vice governor of the central bank, Pan Gongsheng, said that in order to prevent market risk, the government would strictly regulate cryptocurrency trading to end all related activities and services, according to a recent Reuters report. The memo is not yet policy, and it is still unclear whether it will become so, but it is indicative of the stringent stance China is taking on cryptotrading to lower perceived financial risk in the country. According to the memo, Pan said, “The financial work conference clearly called for limiting ‘innovations’ that deviate from the need of the real economy and escape regulation,” going on to add that authorities should also block domestic and foreign websites, as well as mobile apps, that provide trading services to Chinese citizens. In addition, Gongsheng even called for the sanctioning of platforms that provide virtual currency payment services. Finally, he called for the investigation of services that help people move funds overseas. The Bank’s position is that “pseudo-financial innovations that have no relationship with the real economy should not be supported.”
The bank’s position is not too much of a surprise, given ICOs were banned in China last year, local cryptocurrency trading exchanges were shut down and bitcoin mining was limited. Cryptocurrency activity has persisted through alternate channels nonetheless.
Google Launches Machine Learning Program
On Wednesday, Google announced the launch of their AutoML Vision, a service that helps developers build custom image recognition models.
The new tool will reportedly allow people with no machine learning expertise to build custom image recognition models. This suits Google’s plans to expand this custom ML model builder under the AutoML, which currently only serves computer vision models. Google’s goal is to allow virtually anybody to bring their images, upload them with tags, and allow Google’s systems to automatically create a customer machine learning model for them. This would in theory allow someone to search via likenesses in images, rather than being limited to the tags in the descriptions. The process is facilitated through a drag and drop interface, into a model that will then be trained to fit custom needs. Machine learning experts and data scientists are in short supply since nearly everyone is in demand of them.
While Google markets AutoML as the only system of its kind on the market, several companies like Clarif.ai and Microsoft’s cognitive services also allow users to customize pretrained models for vision, speech recognition and decision making.
Don’t forget to check back next week for more industry updates and new listings.
Until next week!
The FE International Team