Fast growing startup Twitter will soon be joining a select group of startups with private venture round valuations of $1 billion, we’ve heard from multiple sources. CEO Evan Williams disclosed the round to employees at a recent all hands meeting.
The company will raise around $50 million, we’ve heard, although the final amount of the raise is apparently not yet locked down.
Twitter raised $35+ million earlier this year in a round led by Benchmark Capital and Institutional Venture Partners. That round valued the company at $250 million.
The company has raised a total of around $55 million to date, and sources tell us they have approximately $30 million left in the bank.
Update: A source tells us that New York based Insight Venture Partners is the primary investor in this round, and that the company may raise more than $50 million.
Now it is time to make money after raising money!
twitter opitimizes the art of making money. creating value where it did not exist. twitter is generating money out of pure potential… (the “what if” factor) …cant get much better than that.
Isn’t this exactly what the dot com crash was all about? Over valuing companies that had no potential to ever make any money?
shhhhh… don’t wake them from their amnesia haze.
Freak! Twitter is $1 billion worth? I tell you, the world is coming to an end in 2012!
Twitter guys should write “The Art of Raising VC Capital”
I can get much better than that – making actual money. The Valley is littered with the skeletons of start-ups that had all the potential in the world, chock full of “what if”, users, fans, etc.
I’m not saying Twitter can’t do it. I am a fan of the service for both entertainment and work. But I’m skeptical about a $1 bil valuation without proven monetization, and also question why they need to more than double their bank account if they still have so much of the previous funding left.
There’s more to this story.
Because, I assume, that since there does not seem to be a revenue stream, then they need to find another way to cover their overhead.
Raise money now while they are hot…
Allison has got that right!
Might this have something (READ:EVERYTHING) to do with the new TOS at Twitter?
Before you ask for more..you have to provide new value to your end users.
Hmmmm…. Any bets about how long before the ad frenzy in Twitter?
Valuation ≠ Monetization!!!
Can’t get much better than that… besides actually making money.
Money for nothing
and chicks for free..
Dire Straits all the way!
“Dire Straits all the way!” ,,,except for that song. urgh
Look at that. That’s the way you do it. Play your guitar on the MTV.
no, that aint working. THATS the way you do it.
Wow, that’s some news. If I were Twitter, I would just grab some budding companies that are built on top of Twitter using this new funding. Companies like http://www.boilingpage.com, http://twitvid.com, http://www.twitpic.com etc really adds a lot of value to Twitter.
I completely agree. Keep the Twitter core service ad free and monetize the peripherals. IMO a $1 billion valuation is grossly inflated.
It seems that that’s what it’s all about. Nobody seems to care about revenue. Twitter is a pure hype. Hmm, how to value a hype? Must be big so 1 bill is ok, why not. Wont last forever though.
the Disney strategy. Disney bought up all the real estate around his first theme park because the roads leading to the park were teaming with restaurant, concessions and other non-Disney businesses that visitors stopped at on the way to DisneyLand. Disney exclaimed that those businesses were taking his money from his customers before they could spend it at DisneyLand.
PREDICTION: Twitter will beat out Facebook and join Knoyce.com in 2011 http://bit.ly/ZPSXh
Please, stop your spam. Knoyce.com is ghetto even by knock-off start up standards, and it’s only a matter of time before it fails.
You went to ning.com created an account, copied over a BLOG template and twitter will join forces with you? ha ha ha
By the time Twitter get around to making money, the craze will have died and they’ll have gone the way of MySpace.
Serious. Then again it’s value is growing without even making money. I think they said they are going to come out with “professional” type accounts to make money. Curious to see how that turns out.
Professional? OMG! It’s a kill the Whales campaign!
Will anyone try to save the whales is my question.
If they still have 30 million in the bank of the 55 million, why are they raising more money? Maybe they have something big in the works that will require more employees/infrastructure etc…
finally decided to fix twitter?
Plus what’s their burn rate. Its also easier to raise money when you have money or when there’s a lot of buzz. Tide can always turn and if it does and you need money may have to take a horrible valuation.
Raise money now before attempting to make cash.. they’re probably about to unveil a revenue model, if that falls on its face theres no more raising money at rediculous valuations. So the goal is to raise before you attempt your revenue model, that way if it fails you’ve got runway.
Well..there you go. Exactly. Time to roll out the REAL business model.
Very astute Nicholas. You hit the proverbial nail right on its proverbial little head!
If this rumor is true, then Twitter is raising more money any one of (at least) four possible reasons: a) to increase their (perceived) valuation, b) increase their runway, c) keep the hype alive, d) when investors are looking closely, so too are potential acquiring companies. And we all know twitter had better take a billion acquisition offer seriously this time before Facebook or Google makes Twitter irrelevant.
the 5th reason is acquistions….
Wake up… they are raising money for founders and VCs pay outs, come on.
Because the best time to raise money is when you don’t need it and more importantly when the growth charts STILL look like a hockey stick.
Fuck, Techcrunch writes 5 articles a day on them. That is worth +$200 million on their valuation.
They likely realized that 30 million was not going to be enough to get them to break even. Thus, they made a calculated risk that their valuation was high enough now to justify an infusion. Had they waited another year, their valuation could have dropped, and they’d be in a much worse position with less financial runway in the bank.
I wonder when will they start adding Ad’s on pages and do spam filtering at least for DM’s …
You’re kidding me.
Guess Dick Costello said it right..Twitter is probably one of the few startup that has the potential to become something equivalent to today’s Google, Yahoo, Amazon, EBay..
Facebook
Agreed, Facebook is an internet within the internet.
So was AOL and they EOL.
Dick *Costolo*
Costello was Abbott’s buddy.
Who’s on First
holy cow! One.. BEEEEL-EEEEEE-ON Dollars! It goes to show you the value of their brand. The technology they use isn’t wort a billion, but the brand apparently is.
Its not the brand or the technology. Its the number of users and user growth rate.
Its not the brand? Do you not hear the word Twitter get name dropped when your turn on your TV?
well michael, i have to disagree. i’ve been hearing of twitter more and more on tv. Even our local news station has a twitter page. its everywhere now! lol
You seriously missed @mingranjr ’s comment? *shakes head*
Maybe they can afford a couple more servers. Get some fail over in place.
Twitter will be introducing my Twitter Lite in January – only 70 characters for people on the go
I can’t help but think of that car scene in the movie Something About Merry where the hitchhiker tries to defend 6-minute abs against someone coming out with 5-minute abs.
70 character tweets, seriously!?
this would be the perfect time to use AnyClip
I think you’re missing the genious behind!
he continued, that if 5 minutes wont work out for ya… they will ADD sixth for FREE !!
brilliant
++
Maybe investors should wait to see how Twitter plans to turn a profit before tossing in a billion dollars over to them.
Nobody’s giving them a billion dollars. Learn to read more carefully.
They are being valued at that which means investors could add up to that amount. A billion dollars is a crazy valuation for a company that hasn’t turned a penny in profit. I think investors should wait to see profit before tossing in up to a billion dollars into Twitter. I never said anyone had already given a Twitter one billion dollars either, so who isn’t reading carefully?
That’s a looooooooot of underpants…
I wish I could upvote this.
I like Twitter and think they will be successful but do not think they can be this successful. My guess is that usage flattens and other forces erode their importance over time (Facebook, Friendfeed, etc.) and the concept lives on but Twitter itself loses importance. This is a HUGE risk on the part of the investors. I bet they accompanied this round with a small shopping session to see if they could sell the company. The fact that the round happened means there are no “stupid” buyers willing to take the bait. Very interesting development.
Hell yes! A billion at least. Twitter is becoming the Google of the 21st century.
Really?
Isn’t Google the Google of the 21st century?
Excellent point!
you love italics!
+1
From who?
Not me.
I’d like to know that myself.
What if Lithuania buys out Twitter due to their heavy investment.
OMG I don’t know Lithuanian! I can’t tweet Lithuanian.
OMG. Worse scenario…DONALD TRUMP
Twitter Business Plan: Raise Money Until IPO or Acquisition.
No no no, that’s Facebook’s plan (regarding raising money until an IPO)…Twitter’s is “Hang in there” until an acquisition most likely (especially if they can’t come up with a decent revenue model, and I’m quite sure that if they go the route of “Sponsored Tweets” within streams/searches, etc they’ll lose all credibility and will fall flat on their faces)
Hell yes! A billion at least! Sky’s the limit for Twitter is the new Google (and the world needs a new Google every decade or so.)
I beg to differ Scoble said 5 Billion
awesome guys, keep up the great work!
Twitter doesn’t need to turn a profit for this to be a good investment. All it needs is for someone to buy it at an even more stupid price. Of course, a couple of years later the buyer will write off most of what it paid, as almost always happens.
Good old castle in the air theory, eh? I always get confused by investments at this high of a valuation, because for their investment to have a good return, they need the future valuation to be more than 1B, along with the liquidity for that… Do investors really see this as being a 10B company in the future?
Twitter is certainly here to stay. I wonder if the same can be said for services built on top of Twitter. It’ll be interesting to see how Twitter will partner or compete with the current ecosystem of Twitter based products. In any case, social micro-messaging is big and very very exciting.
That’s what Time Warner said about AOL.
Dave, absolutely right, and it’s also what just about every other buyer of a social media company said about its acquisition…two years before it was forced to write down the value because it realised it paid too much.
But inflated valuations are good for VCs, founders and advisors because they all make loads of money from the deal. Even better is that the buyer is unlikely to be held to account if it turns out to be a bad decision.
ah, money/profits are overrated
No revs. and 1billion sounds like youtube, skype and myspace! WOW
Wow, you weren’t kidding Mike, when there is no revenue, you can just make up wacky numbers. I guess the “pulse of the planet” is worth a B.
Okay, will someone please explain the valuation arithmetic?
Is it, buzz + bollocks (balls for you Americano’s), = valuation?
If I invest $10 in your company for a 20% stake, then I value your company at $50.
No, you value it at $40. If you value it at $50, you only get 16.7%.
I would like to see Google/Twitter fight with Microsoft/Facebook for internet supremacy =).
A billion dollars for what amounts to a running a MySQL database! go figure.
I take it you’re in marketing as you clearly have no concept of technology.
+1
and you wonder why the economy is in the shitter when twitter can raise that kind of money.
Is Twitter a fait accompli? The court of investor opinion has clearly returned with a favorable summation, but there’s still a verdict required on how much value gets delivered beyond Twitter itself. Can Twitter make serious dough? The same question is relevant to all in the space.
http://punchand...-fait-accompli/
Now I’m really confused as to why this brand is worth $1 billion. I don’t really get what is so great about twitter as a product. Sure you can listen to celebrities babblings but thats not worth a billion. Sure you can get real time updates from webistes but RSS feeds can do that and even if twitter does it a bit better it still does not make it worth a billion. And yes you can get information fast out of crisis zones like in Iran which is valuable but not worth a billion.
Would someone care to enlighten me as to what twitter brings to the table that other social networks, Google and RSS feeds can’t provide that makes it worth $1 billion? I am not attacking twitter here I am just curious.
nothing, just popularity, tweeter is like a first class hollywood star on steroids that everyone will pay top $ for it, but it will be forgotten within upcoming years.
the only reason why you would want to invest in it today, is that you assume the hype won’t end up within a year, so you end up seeling your part before and make it double, triple, etc.
its just like speculating on a dead stock that you know will die soon (comparing to tweeters popularity) but still its great to make high-risk high-money momentum.
that extra server to load balance mysql costs a few million apparently…
Honestly, the Valley is the only place this ridiculous non sense takes place. No EBITDA and a Billion dollar valuation? What happens when they actually turn on a revenue model and it flat lines? Beyond this…they have $30M in the bank? Why are the original VC’s not hammering them for under utilizing the capital per their plan they originally did the raise on in the first place?
This is madness!
is this an april fools joke?
Twitter joins the “select group” of +1B startups?
So when does a big startup just become a small regular company?
Did someone mentioned no ads? I’ve seen text ads for brands like wefollow.com and graphical ads for Internet Explorer 8.
Do you think they show that info for free? Also the leaked TC documents already show revenue, so there may be other deals that the public are not aware of.
For instance high profile tweeters that use a tweet scheduler? Verified Accounts? There seems to be lots of potential to make even more money in the future.
Advertising is NOT a business model when you’re valued at 1 Billion dollars and making none of that.
in Las Vegas this is called a racket.
Every now and then, something groundbreaking have started happening on an exponential scale since 2006 as far in the internet is concerned… I foresee that by 2012-13 everything on the net will be some hybrid mix of Google and Twitter
Will they finally be able to stay up with the extra 50 Million!
I must admit it’s a cute round but what for? the real question is not “how much money” but “what are they gonna do with it?”. I really like twitter in the shift they created 2 years ago in DM/IM messenger world, buzzing everything in their tracks, but I always wonder what is the next big picture for them? no merging with anyone? no huge partnership? no buy out? but no really more relevant features since beginning of their story in fact. When will twitter is gonna be an adult bird, creating a sustainable model (we all saw what appeared in 1999/2000 with explosion of web bubble…with much valuation…without real value at all!) ?
I wish them to recover path to innovation, like they knew it before.
Please don’t jump on me, since I’m new to the whole “Valuation” thing, but is Twitter *really* worth a billion dollars? Advertising revenues are down, so that monetization approach doesn’t bode well at least in the short term. Suddenly charging everyone for the service is just not going to happen. (Maybe premium users but that’s not going to create a billion dollar company.) Could someone provide some feedback as to where the VC’s got that 1 billion number? I know it doesn’t really matter, except for determining how much new capital they receive but it does seem rather high.
Step 1 – collect users
Step 2 – ?
Step 3 – profit
I make more money than twitter, I should be worth $100 billion theoretical dollars.
Happy for @ev and @biz and all the rest of their team. Bravo! And thanks to @techcrunch for reporting it.
just silly and irresponsible venture firms.
In comparison Facebook generates hundreds of millions in revenue has 300M “ACTIVE” users and is only worth $6B. a 6x in valuation comparison.
This will be a business case in Harvard Business School.
Who really uses Twitter aside from media outlets such as TC and affiliates pushing products?
Just silly!
“Who really uses Twitter aside from media outlets such as TC and affiliates pushing products?”
Celebrities and business owners kissing the ass of other business owners, trying to get them to link/talk about their shitty websites.
Twitter has not proven that they can actually make money; how could they possibly be worth that much? Pure speculation. The money is not in the bank yet.
Don’t get me wrong, I’m totally happy for @ev and @biz but what happens when Twitter starts to monetize the site and users leave?
Stop using the stupid Twitter @user nonsense, and just state their actual name when formulating a response. We’re not all Twitards.
Gee, I wonder if those are the same investors who only invest in second stage companies in the amount of $10-$25 million and only after you are doing $3 million per quarter. The VC world continues to look completely foolish in this economy. Plenty of solid, money making companies out there not getting funded.
And why would someone with zero revenue, with $30M in the bank need to raise another $50M???
Wow, and they still don’t have revenue. Unbelievable!
who led the round?
i suppose even if they are at 0 revenue, their technology probably makes the investment close to risk free.
Cutting bait on Odeo (and paying the investors back) was a smooth move.
wow! i honestly think twitter is here for good. to me, i see twitter’s big points to be that:
1. most use it as a status update to update all statuses (or i do atleast)
2. trends and realtime searching is worth 1billion alone to any marketing/advertising group. hell, look at all of that data! not loaded data but user data. sure there are tons of twitterbots but for the most part the amount of info you get is ’straight from the horses’ mouth.
3. diyers/hackers/software companies have already started using twitter as a mini-remote control service and thats just the start. security systems? phone could tweet when your car alarm is signaled or house motion sensor light turns on? seeing where i’m going here?
4. just my .02 hehe.
well but if google releases a real-time search trends monitor one day, twitter’s trends will be useless, right?
What would Google monitor tho? They can’t access Twitter’s user generated content real-time.
Why would you need twitter to have your car alarm or home alarm alert you via your phone? Why wouldn’t either one of those just text you? I’d rather my alarm send a text directly to my phone (and my wife’s) rather than tweet a warning.
And as far as marketing/advertising trends go, what viable data would they really get? I mean, at some point, most people that use twitter will get bored with it and use it less frequently or stop. It seems about the only reason individuals use twitter is to give themselves an over-inflated sense of self-importance. As if other people care about the mundane aspects of their day.
If someone wants to communicate with me, text me specifically at the least. If someone wants to plan a random happy hour for instance, do a mass text to your friends.
Sure, twitter may have some good uses, but they seem limited.
Tell me i am still on planet EARTH