Egnyte Seeks $25 Million in Venture Funds on Way to 2015 IPOLeslie Picker and Lee Spears
Egnyte Inc., the file-sharing service provider backed by venture-capital investors including Google Inc., is seeking about $25 million in a new round of funding en route to a 2015 initial public offering.
The new cash will fund expansion in Europe and Asia, which currently account for at least 15 percent of Mountain View, California-based Egnyte’s business, co-founder and Chief Executive Officer Vineet Jain said in an interview in New York. A $25 million round would increase the total amount of capital raised by Egnyte to $58 million, he said.
Egnyte, which helps companies store and share sensitive files, is expanding services as it vies for customers with larger competitors Dropbox Inc. and Box Inc. The company, founded in 2007, may generate $35 million to $50 million in revenue this year, according to Jain. Even as Egnyte offers new enterprise-focused services to grow its base of 30,000 customers, its size pales in comparison to Dropbox, which had 175 million user accounts as of July.
“They have a distinctive solution with appealing characteristics for an IT person,” said Frank Gillett, an analyst at Cambridge, Massachusetts-based Forrester Research Inc. “Their challenge is simply getting noticed and attention in a crowded, noisy space.”
In a Forrester survey of information-technology decision makers in North America and Western Europe earlier this year, 44 percent of responding firms said they are using or expanding use of file synchronization and sharing services, Gillett said. Still, the percentage of information workers using free services was more than four times the number using paid services, the survey data showed.
Plans for a U.K. office by the second quarter of 2014, Egnyte’s first overseas, will be key to meeting a $100 million sales target by the end of 2015, Jain said. An IPO by the end of that year is a possibility, he said.
“Having people on the ground is crucial to building and sustaining a business,” Jain said. “You need someone to go and press the flesh.”
Egnyte employs more than 170 people and has customers including guitarmaker Fender Musical Instruments Corp. and New York-based wealth manager National Financial Partners Corp., Jain said. The company projects positive cash flow by the end of next year, he said. Jain declined to provide details on the company’s valuation.
Google Ventures, the venture-capital arm of the Mountain View-based search-engine operator, led Egnyte’s previous round of investment in 2012, which totaled about $16 million, Jain said. Kleiner Perkins Caufield & Byers, the Menlo Park, California-based firm, led a $10 million round a year earlier, he said.
Dropbox, also founded in 2007, is used in more than 2 million businesses and has more than 200 million users, according to the San Francisco-based company’s website.