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Twitter's New VC Round: Red Hot

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Love it or hate it, Twitter, a service that embodies our narcissism, is one that we can’t stop talking about. Even though it’s still a tool of the tech-elite, the San Francisco-based startup that came out of Ev Williams’ Odeo has become a favorite among the chattering classes. That buzz is turning into a bidding frenzy for the company’s next round of venture funding. Multiple sources got in touch about Twitter and its next round — I guess I heard it enough times that I decided to stay up late and write about it.

While it has been reported on a few occasions that the company has raised between $15 million and $20 million, that doesn’t seem to be the case, though it seems to be close to deciding, I am told. There are at least two VC funds duking it out, with Twitter’s valuation pegged at way north of $70 million. In 2007, the company raised $5 million from Union Square Ventures and Charles River Ventures. Valleywag had earlier mentioned Spark Capital as a potential investor and pegged the valuation at $60 million. The news was first reported by Silicon Alley Insider. Looks like that was so…last week!

What is obvious is that VCs are obsessed with the company that started out as a way to group alert to friends via SMS but now has become a communications tool and microblogging service. Several feeder startups that rely on Twitter have formed, and some, like Summize, have decent-sounding business models.

The VC behavior is reflective of the cult-like fervor around the company. Twitter has had problems that include constant (including some self-inflicted) outages that have led to the exit of senior staff. The company still hasn’t quite figured out how to bottle its growth and build a business around it. Whatever happens, the next slug of cash is going to buy Twitter time to figure it all out!

Related link: Follow Om on Twitter.

14 Responses to “Twitter's New VC Round: Red Hot”

  1. I think these Vulture Captial groups really know what they’re doing. Twitter has a large enough following that they can start rolling the ads soon. Then, the VCs can really cash out!

  2. i love twitter and i’m on there (as passingnotes)

    …but even more interesting given this money-raising round: have you been following it’s an open source clone written in MSFT_friendly code (as in, no ruby, not java) by emad ibrahim…it could pave the way for corporate implementation on the scale of drupal if it comes together correctly..

    maybe you guys could interview him, or cover him on ostatic? it’s open source…

  3. “way north of $70 million”? Wow. I love Twitter, but unless I am missing something, that seems a bit overvalued. The business model question continues to lurk and I personally wonder if it’s got the legs to get out of geekdom and into the mainstream. We’ll see…