Dropbox secures over US$500m in credit financing

7 Apr 2014

Image via Gil C/Shutterstock

Dropbox has secured more than US$500m in credit financing, which could be earmarked to improve the company’s infrastructure and ensure its strength in an increasingly competitive online storage market.

Reports from Re/code and The Financial Times differ in speculating how this financing will be used, with the former reckoning it will be applied to the company’s general business while the latter sees it being invested in global infrastucture.

The Financial Times notes that this credit facility led by JP Morgan makes Dropbox one of the best-financed private US internet start-ups, with more than US$1.1bn raised to date.

Dropbox also raised US$350m in venture capital and private equity investment in February, and the company was then valued at US$10bn.

According to The FT, the cloud storage provider’s subscription-based model provides a steady stream of income and the low cost of debt available to it prompted the company to borrow such a large sum.

Dropbox isn’t the type of company to spend without plenty of forethought, either, as CEO Drew Houston revealed at last year’s Web Summit that the firm hadn’t spent a cent of the US$250m it amassed the previous year.

“We were already profitable. We don’t need capital so we have the flexibility,” he said last October.

This could change, however, as Dropbox currently relies heavily on servers from Amazon but, with ongoing investment, it moves towards a better position to own its infrastructure and build its own data centres.

Other movements in the market suggest this is a good time to be securing funds, too, as Google and Amazon both cut prices to their cloud storage services in recent weeks.

Dropbox is also rumoured to be making an announcement on Wednesday, 9 April, that will see productivity features added to its service.

Dropbox is a Silicon Republic Featured Employer, comprised of top tech companies that are hiring now.

Dropbox image by Gil C via Shutterstock

Elaine Burke is the host of For Tech’s Sake, a co-production from Silicon Republic and The HeadStuff Podcast Network. She was previously the editor of Silicon Republic.