Box.net, a provider of online storage and collaboration software, said it raised $48 million in financing to help it hire staff and broaden services aimed at business customers.
Meritech Capital Partners led a $38 million equity investment in Palo Alto, California-based Box, joined by venture capitalists including Emergence Capital Partners and Andreessen Horowitz, the fund operated by Internet pioneer Marc Andreessen. Hercules Technology Growth Capital Inc. has committed $10 million in debt financing.
As companies seek to store more of their documents and data on remote servers, using so-called cloud computing, Box aims to gain a foothold in the market for business collaboration dominated by software giants such as Microsoft Corp. and Oracle Corp. With the new round of capital, the startup plans to add more than 60 engineers and salespeople to its team of 140 by year-end, and will build new products designed for larger businesses, said Aaron Levie, chief executive officer of Box.
“We’re going to be investing quite heavily in our infrastructure, in our R & D, and in our product, to build the next generation of the way that businesses are going to manage and share their data in the cloud,” Levie, 26, who founded Box from his University of Southern California dorm room in 2005, said in an interview last week.
Signing Up Users
Unlike SharePoint, the online file-sharing software offered by Microsoft, Box signed up most of its 60,000 business customers by giving away a limited version of its software. As users get other people in their companies to enroll and work together on documents stored online, Box begins charging monthly rates and unlocking additional features.
Box.net membership is “open for all of our full-time employees,” said Sean Andersen, director of interactive services for Six Flags Entertainment Corp. About 250 employees and partners of the Grand Prairie, Texas-based theme park operator use Box to coordinate marketing efforts. As that number goes up, the company pays a higher monthly fee. “I’m hoping for the adoption to take off,” Andersen said.
Closely held Box doesn’t disclose revenue. The startup had previously raised $32.5 million from investors including Draper Fisher Jurvetson, Scale Venture Partners and U.S. Venture Partners, all of which also participated in the latest funding round.
Box’s biggest opportunity for growth may be in building a sales force that can convert more free users into paying customers, said John O’Farrell, a partner at Menlo Park-based Andreessen Horowitz.
“We see a fair amount of companies that are talking about selling to enterprise customers but don’t take to heart that that is a big effort and something that requires a significant amount of patience and time,” O’Farrell said. “The big opportunity is to start migrating those legacy users who are spending many millions of dollars on older solutions.”
Box also plans to expand its business internationally, where it sees 50 percent of its usage but earns only 15 percent of annual sales, according to the company.
“You have all these gigantic enterprise software guys who are transitioning to the cloud,” CEO Levie said. “Startups like Box get to reinvent the whole model.”