Is Dropbox Inflating an Internet Bubble?

Call it a valuation frenzy. TwitterEUs IPO went through the roof, then we saw a quasi-bidding war between Facebook and Google for social media startup Snapchat. News reports indicate Snapchat turned down at least $4 billion to bet on a brighter future.

Now, Dropbox is getting in on the headlines. Dropbox is a free service that lets you bring all your photos, docs, and videos anywhere, and share them easily. Any file you save to your Dropbox will automatically save to all your computers, your phone or iPad, and the Dropbox Web site. Dropbox also makes it easy to share with others.

The company recently announced a business service that's gaining momentum. Ready to take it to the next level in competition with larger enterprises, the online collaborative storage company is claiming an $8 billion valuation.

Bloomberg Businessweek is reporting that Dropbox will work to raise $350 million in the next few weeks. The media outlet cites EUtwo people with knowledge of the companyEUs plans, who asked not to be identified because the discussions are private.EU

Is a Bubble Forming?

DropboxEUs efforts ultimately seek a valuation greater than $8 billion, which is more than double its Oct. 2011 funding round. The company attracted some heavy-hitting financiers in previous campaigns, including U2EUs Bono and The Edge, Sequoia Capital, Accel Partners, and Y Combinator.

Dropbox could not immediately be reached for comment but a company spokesperson told Bloomberg Businessweek, EUWhat we can say is that with over 200 million users and 4 million businesses, Dropbox has continued and strong momentum.EU

We asked Greg Sterling, principal analyst at Sterling Market Intelligence, for his thoughts on the proposed $8 billion-plus valuation. He told us there are two perspectives on the latest technology investment frenzy.

EUOne the one hand these valuations are based on market dynamics and investor demand,EU Sterling said. EUHowever,...

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