Blog Post

Dropbox Raises $7.25M, Crosses 3M Users

Updated with new information from Dropbox: You don’t go into file backup and syncing for the fame and glory, but that’s what it seems to be yielding for 2-year-old Dropbox. Simply put, people — including my GigaOM coworkers and I — love Dropbox because it works. “We do have a rabid following,” Dropbox CEO Drew Houston admitted in a conversation today.

Over the summer Dropbox raised a $7.25 million Series A round from Sequoia Capital and Accel Partners, adding to $1.5 million in seed money it brought in from Sequoia Capital and Y Combinator in 2007. Accel’s Sameer Gandhi, who had previously led Sequoia’s investment has since become a partner at Accel, led the round. We found out about the Series A via an SEC filing; Houston confirmed the funding had closed but said that the filing was not the final amount. Houston said the company had not yet disclosed its A round because up until last month it was in the process of obtaining the URL from a domain squatter.

He later contacted us (after this article was posted) to share more details. Dropbox had raised $1.2 million in debt in 2007 from Sequoia Capital and that along with interest (on that amount) converted to equity as part of the Series A investment, which included a fresh slug of $6 million. That brings company’s total investment raised to date to $7.25 million. Houston claimed that the round was closed in October 2008, though the documents were filed with the SEC in July 2009. The round was led by Sequoia Capital with participation from Accel Partners.

Dropbox now has 3 million registered users, up from 2 million in September and 1 million in April. Nearly 1.5 million of them were active in the last month, including 300,000 using the company’s new iPhone app, according to Houston. And many of those folks identify themselves as Dropbox lovers, with more than 35,000 signing up to be Twitter followers and 23,000 as Facebook fans. A 2-week-old feature that allows the community to vote on new features has garnered nearly 10,000 votes for the top choice: selectively syncing certain files or folders rather than a whole account.

Alongside other lightweight web apps like Gmail infiltrating the enterprise, Dropbox customers (an undisclosed portion pay $10-$20 per month for additional storage) are now using the simple tool to do their jobs. In some ways, the migration is flowing in the opposite direction — a traditionally enterprise concept is now available to everybody. And Dropbox, as could be expected, says it will offer tools for corporate collaboration in a more formal fashion early next year.

San Francisco-based Dropbox has just 20 employees. The service currently stores nearly 1.3 million gigabytes of data.

26 Responses to “Dropbox Raises $7.25M, Crosses 3M Users”

  1. Dropbox is great I use it regularly, the only thing that might make me switch is Ubuntu One, but I understand this is not a solution for everyone.

    Vishal – you are totally right I was trying to figure out what they did to piss off the company 3M!

  2. @Vital: Yup, that title is rather confusing.

    Same with the writer’s bio: “Neither of them are not shareholders in the company.” That’s so wrong on several levels!

  3. Uhhhh, no, they did not obtain the domain from a domain squatter. They leveraged the courts to commit a reverse domain name hijacking effectively stealing a domain from a third party that registered it in 1995. To those keeping track, that is more than a decade before the service was conceived on a fateful bus trip. So they create a company– knowing the domain is taken–then steal it from the owner using the courts. Liz, nice research. “Trusted Insights…” SCOFF!

  4. I’m a dropbox user and fan of the service as well. Finally somebody is doing this technology right.

    Btw, minor thing– the title confused me a bit at first. I thought by “Crosses 3M Users” you meant “pissed them off.” I eagerly awaited the analysis of how dropbox getting a big funding round managed to irritate all of their users :)