Update: We just got off the phone with IVP partner Todd Chaffee who says this round was actually in excess of $35 million. Apparently, $35 million is just the total of what Benchmark and IVP put in ($21 million and $14 million respectively), while the additional amount put in by Union Square Ventures and Spark Capital is still unknown. According to Chaffee, “Everybody wanted to protect their pro rata and then some.”
Biz Stone just announced on the official Twitter blog that Twitter closed a third round of funding led by Benchmark and Institutional Venture Partners last night. We have confirmation from IVP that the round was $35 million, and that Union Square Ventures and Spark Capital also participated. The news gels with our report last month that Twitter was raising a new round at around a $250 million valuation following Facebook’s failed attempt to acquire the company, with IVP as one of the leading investors.
Stone says the company was not actively looking for additional funding because they haven’t burned through all of the money from the last round. But he was impressed by both of the VCs who led the round (and presumably also impressed by some very favorable terms).
This is the first time either Benchmark or IVP have invested in Twitter. Union Square Ventures participated in both the Series A and Series B as well, while Spark Capital first joined for the Series B. For more information about Twitter’s funding history, refer to its CrunchBase profile. As part of this Series C deal, Peter Fenton from Benchmark will be joining Twitter’s board of directors.
According to Stone, this round is intended for Twitter to go from strength to strength:
Twitter is growing at a phenomenal rate. Active users have increased 900% in a year and even though our web traffic is amazing, we see twice that traffic to the APIs. Interacting with Twitter over SMS is also getting more popular every day. Our relatively small team of 29 employees has accomplished quite a bit lately but it’s obvious that we have the world ahead of us.
Stone has also indicated that it’s time for Twitter to get serious about making money, saying “We are now positioned extremely well to support the accelerating growth of our service, further enable the robust ecosystem sprouting up around Twitter, and yes, to begin building revenue-generating products.”
great, another twitter review.
jk
this cannot be ignored
maybe they will make strategic acquisitions or mergers to bolster there strategic online footprint and to futher utilize there social utility on a platform they own. hope jack still has a piece of the company he helped co-found. from a societal perspective money is better spent in the market win or lose than in some venture groups bank acct doing nothing.
FollowLocator.com – leash yourself
I agree, it is definitely news worthy.
Are you kidding!?!?!? Another round in the tens of millions??!
I love Twitter, but I don’t see how anyone is crazy enough to keep giving these guys money. Insane!
great – the biggest non-business model gets more money! ha! good luck…
UUUm what is really really TWITTER’S BUSINESS MODEL,, how do they plan to make money.
Obviously they add value to the community.
Value equals Money
Whether we see it now or not
Their business model? Easy: the name “Biz Stone.”
You can’t buy advertising like that. Well, you can if you change your name to “Money McWin.”
That IS an awesome name.
Just call me Biz …
I’m all Biz …
Biz is my name … and biz is my game
Anjali Sen
the plan is to take more vc money then wait another year to take more money then when asked say we werent actively seeking more vc money. then rinse and repeat the cycle. their business model is to take vc money
why would twitter have a business model? as soon as they dump ads or try to sell twitter, someone will come along and out-do them…
hahaah
Great. They get millions for having a nearly useless website that doesn’t have revenue. The startup I worked for was revolutionizing real estate. Yet even though we earned revenue we couldn’t even get a few hundred k. This is sick. $30 mil and they didn’t even ask for it. We were almost begging for 3 years. The economy must be really dried up since you can’t get any funding, unless you’re twitter.
“They get millions for having a nearly useless website that doesn’t have revenue”
I do not think the site is that useless but agree with the no money making part.
It’s basically mass text messaging via the Internet. Everything twitter does we have already had available to us for years. Twitter is just another way to text message and no one makes money doing it. At least AT&T earns massive revenue for text messages.
So really, what is the point of twitter? Want to see sports scores? There are other apps for that and sports sites. Want to get journalism? We already have blogs and news sites. Want to know what Shaq is doing? Read a tabloid, blog, or realize it doesn’t actually matter to you what Shaq is doing.
What is this “available to us for years?” Email?
Email, sms, forums, chat apps, and chat rooms. They all do what twitter essentially does and that’s get a message from one place to another. Think about it this way. If I want to send out an email to many people I have a mailing/distribution list. So what is twitter but a dumbed down and shortened mailing list? Twitter is like sending out a mass email to everyone subscribed but they only get the subject, no body. I’ve used twitter and I really don’t see its usefullness. I already waste time checking my email. Why should I have to check multiple technologies just to see what people are doing or say something?
I mean, can’t we just pick up a phone and talk to who we actually want to? What do I care if that person I knew 10 years ago in high school just went to a movie? I live 800 miles away from them. Twitter is just another step at simplifying the Internet in a bad way, a dumbing down of the Internet.
You’re right Nathan, Twitter is all about simplifying Internet communication so the shortcomings of other models are resolved.
You don’t have to check multiple technologies if you don’t have the time too, if you don’t care just stop following your friend; as Biz mentions, Twitter’s (in general microsharing) usefulness is based on making the technology work for you.
It’s obvious from this comment that you don’t use twitter and therefore don’t totally get it. It’s not about new technology, it’s about using existing technology to change culture. Twitter represents a different way for people to interact, and it has no doubt proven interesting.
I signed up for twitter a few months ago, started “following” some people I knew, read some status updates, got bored after about 10 minutes and never came back.
Like Nathan, I don’t find it useful at all. I really don’t care restaurant some guy I know ate or what not. Indeed, some of the posts I find interesting, but they are far too short to be relevant enough to me. I’d rather see a few hundred word analysis than a tiny <200 character message. I just see it as a bunch of noise.
But then again, I’m sure some people have some use for it.
this is NOT good. They recently completed $20M round and they are taking on more cash and diluting the company further. Possible scenarios.
1) Founders sold some of their personal holdings to gain some nice cash (this would be great)
2) They really have no clue how they are going to monetize (highly likely)
3) They may be looking to acquire best of breed Twit API partners or other (unlikely)
4) Did the previous VC’s participate? (I’m assuming they did though no mention. If not. NOT GOOD)
I could see #3 easily happening…or at least implementing a few of the best-of-the-best tools. It would be fairly cheap and they obviously have the cash now to do so.
I imagine a big improvement in the way re-tweets are happening now compared to favorites. Ideally, I don’t always like to see the re-tweet noise in my feed so this would be my suggestion for twitter:
• No more re-tweets, use the star (favorites) feature already available
• Clients could implement a “show your friends favorites” function using the same methods as fav.tweets (http://www.sixt...com/fav.tweets/)
– for example TwitterFox could have a “favorites” tab that shows your friends latest favorites
• Multiple digg-like tools could be built on top of this if everyone would use the same method that would allow mass-audience to see that latest trending topics, etc.
The Previous VC did participate: “and that Union Square Ventures and Spark Capital also participated”.
Congratulations Twitter!
so at this point they would need an acquisition offer of around $500m-$650m . I just cant see that happening with them not generating revenue and as we are seeing with Facebook and other big social networks the users don’t have any loyalty to the sites after a period of time.
I am really surprised…we are still waiting for their bussiness plan..and we received these good news…amazing.
Congratulations, what a round !
Any comments on the valuation ?
Any comments on the exit price ?
Any analysis to share ?
Well, you just HAVE to think, that in this economic climate, the VC’s MUST have seen something exceptional from the team ito expected returns (read: a viable plan to monetize the model), in order to convince them to pony up another 35 bar, right?
Most VCs don’t have the capacity for rational thinking.
Valuation?
usually its x10 of revenue – expenses
0*10 =0 valuation
One could be very struck by this news, but I will need to just remain positive and be happy for the Twitter team. We hope that they find great use for their funding.
Valuation guess is $310 MILLION
with ZERO revenue. God bless America. I’m leaning towards founders cashed out some of their holdings.
You are sooo right – my business (www.freevoiceline.com) has *direct* impact, is mainstream, and is catching traction faster than we could ever imagine… but businesses that have direct utility to the general public these days don’t seem to interest TC that much.
Oh yeah, and we *do* have a very solid business plan and model… perhaps that’s passe. Who knows.
Wow! Let’s go Twitter!
twitter is simply exploding and keeps getting more and more popular. twitter search is stunningly useful for real time info, and we all know how profitable search can be . smart VC’s are stumbling over themselves to get a piece of that action.
Search is highly profitable for google in that those who search are often in ‘transactional’ mode…looking to buy products or services. Is the same thing true about ‘real time’ sorts of searches? I don’t know one way or the other. Thoughts?
I think we can view Google’s partnership with Myspace as a source of precedence:
http://valleywa...ng-but-ours-are
So Brad, you’re spot on. There’s a misconception that search + keyword ads automatically equals profit. The TYPE of search is most pertinent.
Every day I read that some company has started its twitter stream… the day twitter starts charging nominal amount they will see the light at the end of the tunnel….
This latest round should be noted, especially among the naysayers, in our current economic environment.
Going forward, the new mantra for startups will be provide ‘Value to the Community’ and the rest will follow…
Twitter is providing tangible value, hence the investor confidence.
Twitter has a perfectly good business model: “raise more VC”
Raise more VC until they get bought out. That’s been their entire strategy since day one.
Yes, sad enough. The idiotic approach of generating revenue from VC.
Unfortunately, this only works in bubble times.
Anjali Sen
Funny how many haters came out to the show today. Folks, Twitter is / has changed social. Why is anybody really that surprised?
it looks like the fanboys are here as well
Direct hit! I’m not going to deny my fanboyness, or deny how long I resisted against it. Then again, I also resisted against IM back in the 90s.
Because we’re in a huge economic downturn caused mainly by the excesses of the financial community giving money to people that could never possibly pay it back?
Twitter is the 16 year old that has been handed the keys to Dad’s car and a bottle of whiskey for his birthday. Is it possible that these VCs could be less responsible with their investor’s money?
When a ship is sinking, open up the champagne.
We should all cherish the fact that there are people with the cajones to pop the bottles open and not get all in a tizz that there are no life rafts…remember, we’re here for the pursuit of HAPPINESS…of which, $35MM can buy a whole heck of alot.
What?
I agree with Eric F, yes the fanboys are here. Twitter has value obviously and everyone recognizes it, get use to it and start congratulating.
hey silicon valley dropout, what’s your twitter name? Mine is:
http://twitter.com/cliffdailey
http://twitter....m/silvaldropout now dont be spamming my joint
and the bubble goes …
BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM BOOM
Now hold on just a minute….the first bubble resulted because VCs were giving money to vaporware companies, and entrepreneurs were wasting the money away on trips to posh clubs and caviar. Twitter isn’t vaporware, and they don’t throw the money they’re given out the window.
Yea, obviously, sites like Pets.com weren’t vaporware, but the failure of sites like Pets.com wasn’t what led to the massive crash. It was the failure of too many sites like Boo.com. We don’t have sites like that anymore.
Just because you see sites with no profit,…er revenue..being given lots of money doesn’t automatically mean we’re in another bubble. In fact, there is NO WAY in HELL we are in another bubble. I bet my left nut.
March 2010: AOL , or some other dumb f#*cks, will buy Twitter for 800 million dollars. The deal will be led by a group of MBAs Grads who get 6 figure salaries to destroy value, i.e. buy things for 100x what they worth. They do it with your money (they are public company , and pension funds/mutual funds with your 401K invest in them).
March 2011: AOL, or some other dumb f#*cks, announce, through their 6 figure salary PR person, their financial results, showing they now think Twitter is worth $30 million. The MBAs Grads are trying to find a buyer for this, but can’t – because they get paid to buy stupid things, they don’t know how to sell stupid things.
March 2012: The partners at Spark and Union Square enjoy the 2nd yearly Holiday in Hawaii at a 5 star resort hotel, together with the founders of Twitter and some Execs from AOL. Everybody is happy, drinking wine and enjoy fine dining.
And you don’t have a job…
Without scenarios like this James, how do you expect us to revert back to the medieval era, where all you had was the super-rich and their serfs toiling in the fields?
I can haz tulips.
Congratulations to the Twitter team.
Its time for the celebrations for the whole twitter team . All the best guys. Keep Rocking
damn.
how much do servers cost these days?
When trying to successfully scale ROR? hmm, about $35 million would be my guess.
CRUNCHBASE is DOWN?????
Im a late 20’s guy who studied computer science and works for a large IT organization.
Pretty much all my friends, associates or work colleagues would not get twitter , because twitter is useless and its sad.
Yes lots of companies are having twitter streams ie TV / news shows but as soon as they have to pay for that service they will drop it.
Twitter is destined to remain a ‘hot for the moment Geek toy’
wow twitter is great, but I cant believe they got that much money…
Congratulations to the twitter guys on ripping off a few more VCs – think about all that money and where it’s come from… pension funds, investment managers, etc. Don’t think I’d like to investment my retirement money in what is essentially a rip off of facebook status.
These VC’s are lame… they just follow the stupid alexa charts (or comscore, or whatever). There are so many other real business ideas that could be funded, but instead 35m goes to a non-business.
this economy is only going to get worse… people will wake up, they have to
I don’t understand why it takes so much money to operate a trival service.
It sounds trival but it gets complicated or challenging when you have thousends of requests or tweets in a second. And they are still growing.
Twitter raises 28 million in Series D funding… coming soon – where is the revenue? Anybody knows?
These are good news for Twitter.
What a stupid investment…no business model nor revenue. What happened to common sense?
Big congrats to the folks at Twitter!
it’s down now.
it seems twitter finished their third round and bagged $55 million as funds
Who cares what the venture guys are thinking or if this is a bubble evaluation or whether they will make money in the long run.
As long as they keep Twitter going, it is okay…
I am yet to be convinced of the model of Twitter as a mass adaption. Well, call me old school, I am with Gigaom on it when they say 1 liners will take some time for people to really think that it is worth a read.
Net’s main area of trouble is information overload and attention deficit. Is twitter helping to get out or aggravating the problem???
Nevertheless, good to know that they got the cash in this tough economy!
Hey check this out. Get 1000’s of new followers on Twitter!
I just found this site that shows you a way of getting 1000’s of new followers on twitter, I just started using it myself and its starting to work
already. http://tinyurl.com/cpvadh
It might interest you.
Go twitter woot woot!
take over facebook and google in one shot! lol
I did some simple math, and come to the conclusion that Twitter is being valued at around $ 950 million and should have annual revenues of around $ 200 million, to warrant investments to date. See my comments and conclusions at my group at http://groups.g...models-for-web/
Feel free to join, contribute or comment if the subject matter interests you.