Silicon Valley’s Hottest Startups Get a Taste of Going Public Without the IPO

Dropbox’s decision to raise funds privately last year was supposed to buy the cloud storage provider time to prepare for life as a public company. The financing round, which valued the company at $10 billion, would allow Dropbox to focus on growth and build a viable business. “Our investors are happy. Things have been going well,” Chief Executive Officer Drew Houston said on Bloomberg TV in June. Dropbox had no plans to go public anytime soon, he said. But in some ways, it already had.

Dropbox got a shock recently when Fidelity Investments and BlackRock wrote down the value of their investments in the company by at least 15 percent this year. Fidelity also marked down its stakes in Snapchat, Zenefits, and other closely held technology companies, according to data from research firm Morningstar. The disclosures, which were made in routine regulatory filings, surprised Silicon Valley. Not even many of the companies were aware that certain investors regularly adjust the value of their holdings and report the estimates publicly, say people with knowledge of the situation, who asked not to be identified.