Twitter's New VC Round: Red Hot

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.

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