Cloud storage firm Dropbox is set to begin trading today following an initial public offering that will see the company valued at $9.2bn (£6.5bn) - ahead of some Wall Street estimates, but still below the company's valuation as a private company.
According to The Wall Street Journal, the initial share price for the firm will be set at $21, above the previously forecast range, but even with strong investor demand, the company's valuation will come in below $10bn, which it was valued at during its last private funding round.
The share price is above the $18 to $20 range Dropbox forecast in regulatory documents on Wednesday, which had already risen from the initial $16 to $18 range the company proposed earlier in March, indicating there is strong investor interest in the offering.
A 'down round', where a company's debut market valuation fails to match up to its fundraising promise, has previously been one of Silicon Valley's biggest fears, but investors seem to be adjusting to the fact that, with billions of dollars of private funding flowing into the tech industry, a down round isn't necessarily a sign that a company will become a successful public enterprise.
"There was always a little fear around acknowledging that if I price below what it was previously, there a guilty feeling that it was a failure," said Yogesh Amle, managing director and head of software at Union Square Advisors. "You just have to open up to the reality that we have to price this pragmatically."
Payments firm Square has become a poster child for this effect. When it listed in 2015, it was for less than half its previous private valuation, established during a funding round in 2014. However, the company went on to double revenues, shrink costs and become cash-flow positive, with its stock increasing more than sixfold as a result.