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Aaron Levie, the entrepreneur behind file storage company Box, wrote on his blog yesterday that he was incredibly excited that General Electric has chosen Box as its corporate standard for content sharing and internet -based collaboration.
It seems Box has been pitching General Electric for nearly two years to bring this off, and Levie is obviously delighted to be able to announce the new strategic relationship for Box.
With over 300, 000 employees world wide General Electric will certainly have plenty of needs for storage and collaboration between them all its people. As a tech savvy company, they are very much into embracing the cloud, and collaboration tools, as well.
In his blog Aaron Levie acknowledges the support Box obtained in the early days from its first major customers like Proctor & Gamble, eBay and Schneider Electric. These essentially enabled Box to build the scalability, security, and end-user experience necessary to support all such large organisations.
Accordingly, Levie also now gives a nod of specific thanks to General Electric’s Chief Information Officer, Jamie Miller, and her team who are strong champions and supporters of this new way to deliver technology to employees.
With its previously announced IPO plan, Box may well also have been waiting to be able to announce the new deal with General Electric before going definitively down that path. The eight year old company revealed its preliminary S-1 Registration Statement with the SEC in late March, after earlier filing it confidentially, for such an offering.
Box was reportedly hoping to raise as much as US$250 million with an issue, but so far it has not gone much further, and there has lately even been some reports the IPO was being reconsidered, due to the general weakness in tech stocks in recent days.
Now with the General Electric announcement under his belt though, Levie’s lead investment advisors, Morgan Stanley, Credit Suisse and J.P. Morgan Chase may feel a good deal more comfortable pushing the boat out on the IPO.
It will certainly be timely if they do, as the company lost almost US$169 million in its most recent fiscal year, which ended January 31st, 2014. In that year the company also spent over US$170 million on sales and marketing alone – perhaps some of that went on the many presentations they must have made to woo General Electric, along the way, which really is now a major feather in their cap.
As a result of that big loss however, Box, which is no longer a start-up, and increasingly gets judged on its business operations as well as on its concept status, ended the fiscal year with just US$109 million in cash left in its balance sheet (before deducting US$34 million in debt). This adds up to barely a 4 or 5 months cushion before running out of money, at its then burn rates at least; hence the need for an IPO.
Thus far Box has been funded by private venture capital, so Box likely would have some deep pockets to turn to if it really had to. Over 25% of Box shares are presently owned by VC firm Draper Fisher Jurvetson, one of the company’s original investors. The next largest holder is US Venture Partners, which has a 13% position. Co-founder and CEO Aaron Levie owns only 4.1% today, or something over 5% if you include all of his options.
As with Facebook and a growing number of other technology companies, there is expected to be a two class share structure, with different voting rights, after such an IPO is completed.
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