It's been over a decade since Dropbox (NASDAQ:DBX) was founded, and the company has finally made it to the public markets after many years of speculation and growing investor interest. The IPO was initially expected to price at $16 to $18, but that range was increased to $18 to $20 earlier this week due to strong investor demand for Dropbox shares. The deal officially priced even higher last night at $21.

Shares have started trading today and have surged as much as 50% higher than that offering price as of this writing. It's pretty clear that investor demand is strong.

Dropbox interface on Mac

Image source: Dropbox.

Bolstering the war chest

Given how much investors are clamoring to get their hands on Dropbox shares, there's a decent chance that the underwriters will exercise their options to purchase an additional 5.4 million shares from Dropbox. Those options are good for 30 days. That would be in addition to the 26.8 million shares that Dropbox has already sold through the IPO (the other 9.2 million shares sold through the offering were sold by existing shareholders).

Also, remember that has agreed to buy another $100 million worth of Dropbox shares through a concurrent private placement. After factoring in underwriter options, the private placement, and underwriting discounts/commissions, Dropbox expects to raise net proceeds of approximately $740 million. That money will be needed to compete in the cloud storage space, which is only getting more competitive as tech giants engage in an ongoing cloud pricing war that has been raging for years.

The company plans on using about $213.4 million of those proceeds to pay down a revolver that it recently drew upon to settle some restricted stock units (RSUs). The rest will be used for general corporate purposes.

The public road ahead

It's also worth pointing out that at around $31 per share, Dropbox is valued at over $12.1 billion. That's higher than the $10 billion valuation that Dropbox fetched in a 2014 private funding round, and allays any concerns related to the negative optics of Dropbox going public at a lower valuation (a downround IPO).

That also means that Dropbox is trading at around 11 times sales at today's high, an undeniably rich valuation. Smaller rival is the closest comparable pure-play in cloud storage, and trades at 6.1 times sales in comparison. The pressure is now on Dropbox to execute as a public company.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.