Friday is a big day for the tech and investor communities, as Box Inc. gets ready to make its debut on the stock market. Considered to be the first tech IPO of 2015, the company raised its offer price to $14 a share, making it worth roughly $1.67 billion.

It has taken 9 eventful years for Box CEO Aaron Levie (who wears business outfits with garishly colored sneakers!) to get Box to take the company public. Often regarded as the rising star of Silicon Valley, Aaron Levie, knows his journey to make Box public is “unusual.”

Established in 2005, Box is a Los Altos, CA-based cloud-storage company whose IPO was meant to happen sometime last year. However, due to a lack of enthusiasm for tech startup shares last year, and in particular cloud-storage companies, its IPO plans were shelved.

Box IPO

Box’s raised IPO price is marginally higher than the initial pricing range of $11 to $13 a share set in its S1 two weeks ago. At this price, Box’s IPO will be able to raise $175 million with a greenshoe option for an extra 1.9 million shares. Coatue, a tech-focused hedge fund has the right to purchase an additional 10% of the company at the IPO price.

The company will begin trading with the ticker BOX on Friday on the New York Stock Exchange.

Box intends to use 50% of these funds to increase its customer base through sales and marketing.

According to its public documents, Box has 32 million registered users, and 99% of that user base comprises Fortune 500 company employees.

Levie owns almost 4% of the company, with early investors Draper Fisher Jurvetson, U.S. Venture Partners and Coatue Management owning approximately 40% collectively. Smith, Box's chief financial officer, owns nearly 1.8 million shares worth $25 million.

Box is not a profit making entity and in fact has posted only losses due to its sales and marketing expenses in its 10-year history. The $175 million raised through the IPO will help Box offset cumulative losses of $483 million since its founding.

Will Box Impress on Debut?

If Box manages to emulate Hortonworks’ success last December it will set in motion a positive momentum for the sector. It will encourage other hot startups to go public, even if they aren't profitable yet.

One of the most anticipated IPO candidates is Dropbox, another online storage provider that was valued at about $10 billion by investors who participated in its last round of fundraising. As opposed to retail consumers, Boxprovides its cloud-storage services mainly to businesses. Dropbox on the other hand is more consumer-oriented.

Why Is Box’s IPO in Focus?

Investors have shown an appetite for technology companies with a string of losses. The most famous instance is Twitter (TWTR), which has only posted losses despite being valued at $24 billion.

Many investors see potential in Box as it is one of the leaders in online storage. People these days rely more and more on smartphones and tablets for their computing needs. As a result, the demand for storing documents, photos and additional digital content in remote data centers to ensure easy accessibility through an Internet-connected device has been progressively going up.

What May Not Work in Favor of Box

In the first nine months of 2014, Box reported $153.8 million in sales. But that came at the expense of $152.3 million in sales and marketing alone, which resulted in a total net loss of $121.5 million.

In the S1, Box specified that it has no intentions of curbing its spending. Management stated that "We have invested, and expect to continue to invest, in our sales and marketing organizations to sell our services around the world." It also mentioned that it does not expect to be profitable in the foreseeable future.

Box’s success as a public company will also depend on its ability to differentiate its offering in the midst of rising competition from tech giants like Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) which offer online storage at very attractive prices.

Our Take

As Box gets ready to take limelight today, its IPO has already created a huge buzz among investors.

Box’s precarious expedition to public offering surely won’t end with the first day’s trading. However, the lessons learnt by Box on taking an overhyped company public might make the path a bit easier for those who follow.

Meanwhile, investors can also consider the top of 2014 IPO’s: Alibaba Group Holding Ltd. (BABA), as it holds a Zacks Rank #2 (Buy).

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