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Something to tweet about: Twitter valued at $1billion

September 26, 2009|David Sarno

Twitter Inc. locked up a significant round of venture funding this week -- as much as $100 million, by some accounts -- despite having little revenue and amid signs that its growth may be slowing.

The latest cash infusion would nearly triple the total venture capital poured into the 3-year-old Internet messaging start-up, to $155 million from $55 million.

In a blog post, Twitter Chief Executive Evan Williams thanked the San Francisco company's new financial backers, including investment firms T. Rowe Price and Insight Venture Partners.

"It was important to us that we find investment partners who share our vision for building a company of enduring value," he wrote.

Williams did not disclose the amount of money Twitter raised, but news reports cited $100 million and noted that investors were valuing the company at $1 billion.

Twitter did not respond to requests for comment.

With hordes of celebrities, politicians and media figures using the service, Twitter has enjoyed uncanny growth over the last year, going from a little more than 1 million U.S. visitors in August of last year to nearly 20 million last month.

Questions about whether the San Francisco company could sustain that growth were partially answered this month: Metrics from ComScore Inc. and other Web ratings firms showed the first decrease in Twitter's user base since the company gained mainstream attention last year.

Meanwhile, the company's plans for converting its massive audience into dollars are still not clear. It keeps clinging to one of Silicon Valley's oft-repeated mantras: audience first, business model second.

Twitter co-founder Biz Stone emphasized the company's patient approach this week when he was asked when the site might start allowing ads, which are widely considered to be its best bet for profit.

"It'll be a while," he said, and users shouldn't expect to see it before next year.

Twitter has also said it would support for-pay commercial accounts for businesses, which would probably offer customers more tools for analyzing what Twitter users say about their products. That feature might arrive this year.

Twitter's last round of funding came in mid-February, when it collected $35 million from such sources as Institutional Venture Partners and Benchmark Capital. Spark Capital and Bezos Expeditions have also invested in Twitter.

In recent days, Twitter has been adding to the slate of sites and services that enable users to tweet, including MySpace and AOL Lifestream.


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