Good Monday morning, and welcome back to work. There’s a lot going on today including a small selloff in cryptos, a very global cut of new venture rounds — the six largest venture rounds in the past 24 hours hail from five different countries — and the stock market is set to shed about 60 basis points when it opens.

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But the real news that matters in startupland is that has gone shopping. Indeed, the San Francisco-based file-centric productivity company that it is acquiring , an e-signature company, for $230 million in cash.

That’s a lot of money for a company that hadn’t raised听that much in venture听capital. Let’s unpack the deal a bit.

Money And Money

Let’s start by examining the dollar situation at each company.

Dropbox’s most recently reported quarter is . At the end of that particular period, the well-known Silicon Valley unicorn had $1.04 billion in cash and equivalents. That means the $230 million HelloSign deal will consume over 20 percent of its known cash. The real impact will be lower, however.

Why? In the third quarter, Dropbox reported free cash flow of $120 million. Presuming that Dropbox didn’t see its business deteriorate sharply during the fourth quarter of 2018, it generated cash since we last saw its numbers. Thus, it had more than $1.04 billion on-hand with which to buy HelloSign. The real impact, therefore, of the deal on Dropbox’s checking account is more muted than it appears if we measure from its third-quarter results.

On the HelloSign side of things, the cash abundance turns into a cash dearth. 小蓝视频色情网页版 has for HelloSign, but only one with a dollar amount, from June of 2017. That’s just under 20 months ago, meaning that HelloSign likely had spent its available funds to grow (venture-backed companies traditionally burn through a raise in 18 months or so, and then raise more off the strength of their recent growth), and may have faced a raise-or-sell moment.

With ample competition in the market, including Adobe Sign and the recently-public , perhaps HelloSign felt it might fit better into a platform. I can see the logic in that. Also, a $16 million Series B likely didn’t value the smaller company at over $100 million, making the deal a better than 2x return for its latest investors.

So Dropbox can afford the deal, and HelloSign likely finds the exit inviting. Why did Dropbox write the check?

Revenue Growth

Dropbox’s of $360.3 million was up 26 percent from the year-ago period. Dropbox’s of $339.2 million was up 27 percent from the year-ago period. Dropbox’s revenue was $316.3 million, up 28 percent from the year-ago period.

You can see the trend: Dropbox’s growth is slowing. And in SaaS, like any business category, growth is a revenue-value amplifier. The faster your business grows today, the more it may be worth in the future. Thus, investors are willing to pay more for growth-y revenue than less growth-y revenue, everything else held static.

HelloSign likely doesn’t have enough recurring revenue to reverse Dropbox’s revenue growth declines in its present form, but the smaller company’s products can be sold into Dropbox’s extant customer base and could add a juicing element to future contract values. If HelloSign manages to do much of that, it could help Dropbox’s growth story.

Which would be welcome at the file-focused firm. According to Google Finance this morning, Dropbox is worth $9.72 billion before the markets open. That’s a huge sum, but still lower than on the popular service. More growth might help Dropbox get closer to that figure.

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Of course, Dropbox is not alone in seeing its value retreat in recent weeks. High-flying technology companies like Apple, Amazon, and Facebook have seen their values erode as well. And cloud-focused stocks as a whole have given up extensive value in recent trading sessions.

The Nasdaq, a tech-heavy index often viewed as a working proxy for the tech industry, is off 19 percent from its 52-week highs. In simpler numbers, the Nasdaq broached the 8,000 level before falling under 6,600 today.

The recent market turmoil in tech is not an isolated result. Political instability, rising trade tensions, war, and other crises exist around the world, adding to economic concerns in Europe, Asia, and South America. Seeing the values of tech shares fall after their dramatic run in recent years is not surprising; when growth begins to fade in the expectations of many, companies priced on high levels of expected growth will get听dinged.

But for Dropbox, the decline is notable all the same. Today, the company is worth $8.3 billion . That is a healthy figure, but one that is beneath both its highest private-market valuation ()听补苍诲 its peak value as a public firm.

Dropbox has shed over 50 percent of its value, compared to its 52 week high.

I’ll leave this here, as I wanted merely to mark a moment I’ve been tracking for a while. That Dropbox is now worth less than its IPO price is likely immaterial for the company, which generates cash and thus doesn’t need to raise external capital. But it could serve as a warning sign all the same for the market. If Dropbox’s value is under pressure, what’s happening to yours?

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2018 is hot for IPOs, doubly so in contrast to the last few lackluster years. Yes, , and , and 2017 were disappointments of varying degree for venture capitalists and employees alike who were hoping that long-held shares might shake loose from the private market.

But the fourth time’s the charm, I suppose and 2018 may make up for some lost time. To that point, a few companies have managed to go public this year that stood out from the normal springtime enterprise IPO cycle.

Indeed, we’ve seen some famous unicorns finally go public in 2018, and it’s been annoyingly satisfying to write some conclusory notes concerning companies that spent more time in the shadows than perhaps anyone might have anticipated.

But how are they doing now, with a little bit of time on public markets? Let’s quickly take a peek at a few unicorn IPOs that we have seen this year and how they are holding up:

• Dropbox
  • IPO price: $21
  • Price today: $30.10
  • Percent change: +43.33 percent
• Spotify
  • IPO price: N/A; reference price set at $132.
  • Price today: $161.03
  • Percent change: +21.99 percent
• Zuora
  • IPO price: $14
  • Price today: $19.62
  • Percent change: +40.14 percent
• DocuSign
  • IPO price: $29
  • Price today: $38.69
  • Percent change: +33.41 percent
• Pivotal Software
  • IPO price: $15
  • Price today: $18.42
  • Percent change: +22.8 percent
• iQiyi
  • IPO price: $18
  • Price today: $18.35
  • Percent change: +1.94 percent
• Bilibili
  • IPO price:
  • Price today: $10.40
  • Percent change: -9.6 percent

All but one of the companies I felt were big enough to warrant mention today are up. Not bad.

Some of the above names are less well-known, I admit. But it is critical for us at 小蓝视频色情网页版 News, and everyone, really, to keep eyes on China’s startup market. There is so much money flowing through the world of Chinese venture that it’s nigh-staggering.

The scale of that cash and the value creation it implies (through spiraling valuations, and so forth) is a global story. And, therefore, so too are the exits of those same companies, especially when they list abroad.

Moving past China, what we can see in the list is a very warm welcome from the markets to recent, large tech IPOs. And all those companies went out before the markets fall apart! That makes the permabear that sleeps on top of my heart happy.

More when the next set of IPOs list. (Just for fun, .)

From The听:

U.S. wireless carriers Sprint and T-Mobile announced plans to merge in a stock transaction that values the combined company at around $146 billion. The combined company, which will go by the name T-Mobile, also plans to build a nationwide 5G network.

, a provider of logistics software and services for freight shippers, announced that it has raised $100 million in fresh funding from Chinese courier firm SF Express. The new round brings total funding for the five-year-old, San Francisco-based company to more than $300 million.

The Hive raises new fund for AI

, a Silicon Valley venture investor and startup creator, has raised $26.5 million for a new fund that will focus on artificial intelligence-powered applications for the enterprise.

Latina founders challenging the diversity stats

小蓝视频色情网页版 News profiles three Latina founders who are scaling up startups in areas ranging from smart mattress covers to legal tech to mobile networking.

This morning Dropbox, the popular file storage company, for its initial public offering. The company’s IPO now has the usual host of numbers: 36 million shares on offer, a 5.4 million underwriter green-shoe offering, a $16-$18 per-share price range, a maximum initial sale of $648 million at the upper end of its range and a fully-cocked $745.2 million bill including the green-shoe shares.

Of the 36 million shares on offer, 26.8 million shares will come from the company in its debut, along with 9.2 million from extant shareholders.

And all that values the firm where, precisely? Welcome to the IPO dance, as it turns out, the numbers vary:

• : “At the midpoint of that range, the company would be valued at roughly $7.5 billion, factoring in restricted stock units and options. That is down from its most recent valuation of $10 billion from previous private investors.”
• : “At the high end of that range, Dropbox would have a market value of about $7.1 billion, based on the number of shares outstanding after the offering. Including restricted stock units, the valuation would be about $7.6 billion.”
• : ” Data-sharing business Dropbox Inc (DBX.O) on Monday filed for an initial public offering of 36 million shares, giving the company a value of more than $7 billion at the higher end of the range.”
• pegs the value of Dropbox at IPO under listed terms on a diluted basis between $7 and $7.9 billion, but that publication also doesn’t like it听very much when you try to quote it. So I’m writing this out instead.
• : “The IPO pricing values the company at between $7 billion and nearly $8 billion when you factor in restricted stock units.”
• : “Dropbox Inc. set a valuation target between $7 billion and nearly $8 billion ahead of its initial public offering, which is set to be one of the biggest tech IPOs in the past few years.”
• : “Dropbox Inc. set terms for an initial public offering Monday that values the company as high as $8 billion. […]听On a nondiluted basis, the company is valued around $6.7 billion, which is a closer comparison to what the company’s market capitalization will be when the shares begin trading next week.”
• : “The San Francisco-based file storage and sharing company would have a fully-diluted market value of around $7.9 billion, were it to price at the top of its range. That’s not inclusive of shares reserved for future issuance under equity compensation plans 鈥� some of which would become effective prior to the IPO. Were those shares included, the high-mark climbs to around $9.9 billion.”

So, a host of answers that peg the firm between the low and high 7s, and some numbers as high as $8 billion with Axios providing a very interesting figure; it would be cosmetically brilliant for Dropbox to be able to nearly claim a non-down IPO.

Regardless, the value of the firm seems to be generally pegged at around $7.5 billion, so long as we trail that initial figure with a host of caveats, including the fact that we are looking at a proposed range and not the final value of the firm. At the same time, 小蓝视频色情网页版 News did some work after Dropbox filed and came up with a little guess as to what the firm might be worth using Box as a market cognate:

So that went well, but it ended built a bit on false premises. Indeed, after we published that piece Box missed its forecast and was dramatically repriced by the public markets. That undercut the above-quoted math that we used to generate a $7.5 billion valuation estimate for Dropbox. However, the firm is still shooting for roughly that valuation.

So, Dropbox is effectively pricing itself at Box’s pre-correction ARR multiple, meaning that it will get a premium to Box that it nearly certainly wanted. Just perhaps not the interval it had originally anticipated.

Update: Amended the Axios quote to a longer riff.

From The听:

• We’re beating the 小蓝视频色情网页版 Daily out today. Blurbs will be added when they pop out of the toaster.

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YC was founded in 2005, has invested in over 1588 startups and recently began funding and supporting non-profit groups looking to put the Silicon Valley network to good use. The network has grown over the past 13 years, and the the firm鈥檚 results indicate that it knows what it鈥檚 doing when it comes to picking the best of the bunch.

YC companies have valuations that combined total more than $80 billion. At least $68.4 billion of that valuation total comes from just 15 of YCs investments, including and .

When founding the highest valued company to graduate from the YC program thus far, the Airbnb team Airbnb now boasts a reported valuation of $31 billion and is working on going public (but not in 2018). SaaS company Dropbox privately filed to go public earlier this year. 小蓝视频色情网页版 News has covered Dropbox鈥檚 impending IPO in recent weeks (find everything you need to know about the Dropbox IPO here).

But Y Combinator doesn鈥檛 just fund companies, train them, and run. Graduates and members of the YC community are oftentimes part of the club for years after their participation. This is the case of online HR service provider, which took part in the YC summer batch of Winter 2012. CEO and co-founder Josh Reeves still interacts with the YC team on a regular basis.

鈥淪ome of [the YC team] have become good friends over the years,鈥� he told 小蓝视频色情网页版 News in an email. 鈥淚 also know some fellow entrepreneurs that went through YC with their own companies and ended up returning to become part of the YC staff, which is great for the community.鈥�

He says that they have enjoyed being part of the community.

鈥淢y co-founders and I meet with other founders on a regular basis to share advice and learnings, much like other founders did for us in the early years of Gusto.鈥�

In fact, he mentioned that Gusto runs payroll and offers benefits for most of YC鈥檚 startups, as it did with companies within its own cohort at YC. And the company is still active during the YC batch season.

鈥淲e鈥檝e been so lucky to have the kind of community support that many entrepreneurs don鈥檛 get, so we want to pay that forward,鈥� Reeves told 小蓝视频色情网页版 News. 鈥淭hat鈥檚 why we speak regularly on YC alumni panels, join for Tuesday YC dinners, and help founders whenever they reach out for advice.鈥�

With YC one of the most high-profile clubs to join in the Silicon Valley world, we took a look at the YC alumni that have topped the charts at YC and in the startup world. 小蓝视频色情网页版 News has tracked the top 15 Y Combinator companies with the highest valuations to date. The data includes acquisition prices, pre-money valuations, or post-money valuations where available. We have sourced the data in the chart from 小蓝视频色情网页版 data and other reliable sources including .

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More clearly, when certain classes of tech stocks rise or fall, it’s possible to infer the impact of those movements on similar, smaller private companies. Examples of this arent hard to summon: Blue Apron likely weighed on HelloFresh’s debut, Box’s likely impacted Dropbox’s own journey, and so on.

And that’s why we keep an eye on , a -run cohort of public cloud companies that it tracks over time compared to major public indices. The Index also details a wealth of metrics including certain revenue multiples, but we can leave that aside for now.

What we will observe today is how the recent market chop impacted cloud stocks.

Thinking short term, if cloud stocks are taking punches, enterprise and enterprise-ish IPOs could suffer. Simply put, as 2018 is tipped to be the year that tech IPOs finally get their shit together if cloud stocks falter it could negatively impact the flotation timeline.

So, what is actually happening to cloud stocks? More of the what came before as it turns out, as the following chart notes.

What to see here? First that the recent pseudo-correction¹ failed to make a material dent in cloud stocks. You can quickly see that in the return to form that the index quickly executed.

Secondly, that cloud stocks are rebounding faster than the major indices. While the Nasdaq is merely trying to regain lost ground, the BVP-selected crew has raced ahead to new heights.

A caveat, however. The above chart is only updated bi-monthly. And, per Bessemer, its last update was on the 15th. So, there is some market data not included in the chart. That isn’t overly important given that we are coming off an extended weekend, but it’s worth bearing in mind all the same.

Why Do We Care?

We’ve covered the BVP Cloud Index a few times at 小蓝视频色情网页版 News. Why care about it in this moment? Because, in my view, its recent performance indicates that the public markets are still bullish on growth. That’s quite important for unicorns, firms that are betting that profits can come second to topline expansion in IPO roadshows.

(You can quickly vet the preceding comment by asking yourself what percent of unicorns that go public in the next 18 months will have positive GAAP net income on display. Then, contemplate the story that the other 97 percent of the group that do not have positive GAAP net income will tell. It’s growth. 100 percent of the time.)

And thus, the IPO window may be a bit more open than slowpoke unicorns might have us believe. If investors are still paying for growth at historically stretched multiples, shut up and go public.

1. If at first听you don’t correct, try, try again.

The news makes it the second well-known unicorn to have filed paperwork for a 2018听debut, with Spotify in the hopper since December of last year.

Last July, I when it was reported that the firm was looking for bankers to help with the transaction.

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To say that Dropbox’s public offering is long-expected would be an understatement.

Even more, Dropbox’s impending IPO raises a host of questions concerning the popular filesharing and productivity company: How well has it managed its move into the enterprise space, and how dependent does it remain on consumer revenue; how close is it to GAAP profits after reporting ; and how much of its can be counted as trailing top line?

Those metrics will help set the company’s value, last pegged at $10 billion 听raised in 2014.

What the firm will be worth in a public offering is a parlor game for Silicon Valley.

After all, Dropbox is a bit of a bellwether for the current crop of unicorns: it’s been private for longer than historical norms (Dropbox was founded in 2007.), richly valued, and has a . Its path to an IPO could draw up a path for other firms of its vintage and value.

But what might Dropbox be worth? Let’s list what we know.

Dropbox’s Numbers

As previously linked, Dropbox announced that it reached the $1 billion recurring revenue milestone in January of 2017. We’re calling that the firm’s annual recurring revenue (ARR) result for simplicity. It’s likely close.

If the firm had reached the threshold that particular day or week is unlikely. But it seems fair to say that in the opening weeks of 2017, Dropbox reached the $83.3 million-per-month revenue mark.

But that was merely one of the firm’s most-recent financial dispatches. As I :

• July 2016: Dropbox is听.
• January 2017: Dropbox 鈥�.鈥�
• March 2017: Dropbox secures听$600 million credit line.
• April 2017: Dropbox听, also subtracting share-based compensation expenses.

When you draw a line through those particular points on a graph, the slope points to an IPO, making today’s news hardly surprising.

Previously, we did , at the $1 billion ARR mark, what Dropbox would be worth using a market comp’s (Box) own revenue multiple. However, it is now just about a year since the firm announced the $1 billion figure. So we need to push it up by Dropbox’s growth rate and then re-run the math.

So, how quickly is Dropbox growing? According to , this quickly (emphasis added):

Market value remains the focus of the increased scrutiny. In 2014, when backers last invested, they agreed Dropbox was worth $10 billion. People familiar with the company鈥檚 financials say it could top that mark in an IPO, but that may be a tough sell. Still, they say, annual revenue growth is enviable, about 30 percent. Dropbox declined to comment.

This helps quite a lot, as it allows us to better estimate Dropbox’s current ARR pace, and, thus, get a crack at its valuation.

In short, we’ll take the firm’s revenue, boost it by the above-reported growth pace, and then slap Box’s comparable听revenue (ARR) multiple to get a decent handle on what Dropbox might be worth. We will presume similar profitability metrics and growth pace, which we’ll handicap directly afterwards.

Here is where that leaves us:

• Dropbox January 2017 ARR: $1 billion.
• Dropbox mid-year reported growth rate: ~30 percent.
• Dropbox January 2018 ARR estimate: $1.3 billion.
• Box market cap January 11, 2018: $3.03 billion.
• Box’s : $129.3 million.
• Implied Box ARR: $517.2 million.¹
• Rough Box ARR multiple: 5.8x.

Having done all that, we can gist out that Dropbox, at a $1.3 billion ARR pace, would be worth $7.5 billion.

That is far under its previously-noted $10 billion private valuation. (A testament, perhaps, to private-market investors pre-buying growth a bit too far out in the future at the time.) However, it remains a healthy sum. Early backers of the firm will do incredibly well at that price, it would seem.

Box’s Kindness

Something to keep in mind in the above is how far Box has recently recovered in the public markets, something that has taken quite a lot of stress off of Dropbox.

Box traded under $10 per share in 2016. The firm, now pennies under $22 per share, has seen its equity dramatically rebound. Of course, over the ensuing time period, Box has grown as well. But its revenue multiple has undoubtedly improved.

And that’s good for Dropbox. If the still-private company deserves a premium to Box’s metrics remains to be seen. The numbers will bear that out. But if Box was trading at its prior multiples, it would have been a far heavier lift to reach a public-market valuation that it would have liked.

—

The math seems to imply that Dropbox is worth billions of dollars, but perhaps a few billion under its last private valuation. But what we don’t know is how far the firm has gone towards profits and how much growth it can jam into the next quarter or two.

1. We don’t have monthly Box revenue data, so we’re using is most recent quarterly revenue figure, times four, to get an annual number. Of course, not every dollar of Box’s top line recurs, but it’s about as close as we can get for a publicly traded security, in Dropbox’s market space, of similar size, that has mostly recurring revenue. So we’re doing our best.

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