Twitter VC Funding Done, Raises $15M

106 Comments

I spent most of the day digging up more information on Twitter and its new round of funding that I reported last night. The update is that Twitter reached an agreement with investors today to raise $15 million in funding at around $80 million pre-money valuation. A new investor is leading the round with existing investor Union Square Ventures also participating. With this round, the company will have raised a little over $20 million in VC backing thus far. [digg=http://digg.com/tech_news/Twitter_Series_B_Funding_Done_Raises_15_MM]

Official news of the deal is eventually going to percolate out, and hopefully I will be able to nail down the specifics on who is the lead investor. Valleywag and Silicon Alley Insider had mentioned Spark Capital as a potential investor. Meanwhile, I am told that Charles River Ventures, after fighting a bit, is now out of the race. The news of new funding comes at a time when Twitter is dealing with a whole slew of scaling and infrastructure issues. Today, the folks there almost threw their proverbial hands up in despair.

Update: Twitter the great facilitator of e-narcissism also can’t keep secrets. As Michael Arrington points out, two tweets from two parties add fuel to the rumors of Spark being the mystery investor in the San Francisco company.

106 Comments

ValGeenie

inflation, recession, yet the .com nonsense 2.0 days continue. Amazing. Hopefully, for the sake of the LP’s in the VC funds which invested in Twitter, Twitter will manage to pull a Mark Cuban-like sale to a stupid acquierer…hey, like maybe Yahoo!

Carsten Reinke

This is ridiculous.

What do we have:
– No working system, to be more specific: A proven unability to actually deliver a working system.
– No business model.
– No revenue whatsoever.
– Huge costs for sending short messages (which will probably be that high that paying for them with ads won’t work)
– A couple dozen clones.

Sorry, I don’t get it.

fauxgentleman

Can someone, anyone, explain their business model to me? It looks like there isn’t one, yet they managed to pull $15 mil in financing?

rabble

So ironic! Charles River Ventures DID own twitter at one point, back when it was a project of Odeo. They didn’t want anything to do with it, thought was worthless, and let Evan Williams buy them out for about what they put in. A classic example of VC Fail.

Thomas

Om,
The downtime probably cost them $120MM in valuation. No downtime and they would be the hottest communication platform start-up going right now and would easily have been able to grab a $200MM valuation. The W2.0 crowd penchant for cheap and fast is starting to show its roots.

Joe S

So they now value Twitter at $95MM (post money), meaning that to create an exit for the latest investors would mean that they have to build a Billion dollar company around the ability to send short messages?

I could be very wrong but this looks more like a neat trick and a good story vs. a real company.

jimconnolly

Great post OM (as always),

I use and recommend Twitter, it’s superb! I just hope that this investment is a good fit and that they continue to develop the product.

I am also really looking forward to seeing how Twitter plan to monetize all those eyeballs.

Thanks again Om!

Jim Connolly
http://www.thetechnewsblog.com

Jason Bogovich

I would sell my home and cash my pension & 401k & savings and put it all towards an investment in Twitter valued at 80million. I think they are more valuable than Facebook. Perhaps not intrinsically but there is a lot of potential to be THE evolved form of communication in 5 years.

Steve

So what is Twitter’s plan to make money? Investors can’t just be throwing money into a hole? Can they? Waiting for a buyer?

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