Tech Companies Aren’t Hurting For Funding

With the economy lagging, it is no surprise that many companies are having trouble raising capital. Individuals are investing less in venture capital firms – lower this quarter than at any time since 2003 – and venture capital firms, in turn, have less money to invest as well.
Start-ups and tech companies, however, have found fewer barriers to getting the fundraising they seek. Airbnb, a service that connects people with vacation rentals, recently raised $112 million, and Tumblr raised $85 million last month. It is also speculated that DropBox will soon initiate – and easily accomplish – a massive fundraising venture.

First, though, the latest deal involved a counterpart of DropBox’s in the cloud-based file hosting industry: Box.net, which raised $81 million of new capital in an infusion that valued the company at $650 million. Based in Silicon Valley, the Box offers file storage and collaboration services to both individuals and businesses. Recently it has focused on its business software, which is designed to compete with older firms like Microsoft and Oracle in a way that best takes advantage of current business trends. Box will use the added money, which was contributed by a group of venture capital firms, to expand overseas, further develop its infrastructure, and work with other cloud-focused software firms to better integrate its services.

Industry analysts say that the $81 million invested in Box.net is more a sign of investor confidence in cloud computing in general than it is in the company itself. Although many corporations have already adapted cloud platforms, their use is not widespread and the potential market is still huge. It signifies a fundamental change in the way software is created and managed, and companies that deal with cloud innovation have found themselves on the cutting edge.

But on a larger scale, the data indicates a confidence in the tech sector as a whole. This comes as welcome news. After many years during which the industry was one of the economy’s most volatile, digital and software companies seem to be hitting their maturity and their stride. For the individual business this doesn’t mean much, but for us consumer it spells competition, innovation, and – most importantly – great products.