Data-sharing business Dropbox is seeking to hire underwriters for an initial public offering that could come later this year, which would make it the biggest U.S. technology company to go public since Snap, people familiar with the matter said on Friday.
The IPO will be a key test of Dropbox’s worth after it was valued at almost $10 billion in a private fundraising round in 2014.
Dropbox will begin interviewing investment banks in the coming weeks, the sources said, asking not to be named because the deliberations are private.
Dropbox declined to comment.
Several big U.S. technology companies such as Uber Technologies and Airbnb have resisted going public in recent months, concerned that stock market investors, who focus more on profitability than do private investors, would assign lower valuations to them.
Snap, owner of the popular messaging app Snapchat, was forced to lower its IPO valuation expectations earlier this year amid investor concern over its unproven business model. Its shares have since lingered just above the IPO price, with investors troubled by widening losses and missed analyst estimates. It has a market capitalization of $21 billion.
Still, for many private companies, there is increasing pressure to go pubic as investors look to cash out.
Proceeds from technology IPOs slumped to $6.7 billion in 2015 from $34 billion in 2014, and shrunk further to $2.9 billion in 2016, according to Thomson Reuters data.
Dropbox’s main competitor, Box, was valued at roughly $1.67 billion in its IPO in 2015, less than the $2.4 billion it had been valued at in previous private fundraising rounds.
San Francisco-based Dropbox, which was founded in 2007 by Massachusetts Institute of Technology graduates Drew Houston and Arash Ferdowsi, counts Sequoia Capital, T. Rowe Price and Greylock Partners as investors.
Dropbox started as a free service for consumers to share and store photos, music and other large files. That business became commoditized though, as Google, Microsoft and Amazon.com started offering storage for free.
Dropbox has since pivoted to focus on winning business clients, and Houston, the company’s CEO, has said that Dropbox is on track to generate more than $1 billion in revenue this year.
The company has expanded its Dropbox Business that requires companies to pay a fee based on the number of employees who use it. The service in January began offering Smart Sync, which allows users to see and access all of their files, whether stored in the cloud or on a local hard drive, from their desktop.
(Additional reporting by Heather Somerville, Salvador Rodriguez and Stephen Nellis in San Francisco; Editing by Leslie Adler and Stephen Coates)