Twitter Inc, creators of the popular eponymous microblogging service, are set to raise $100 million dollars at a valuation of “about 1 billion” according to the Wall Street Journal Deal Journal. This news follows extensive rumors of a one billion dollar valuation for the company, which has yet to begin to monetize its rapidly growing service. New investors in the round include T. Rowe Price, Insight Venture Partners, and previous investors Spark capital and Institutional Venture Partners. This is Twitter largest round in terms of valuation, and total dollar amount. This will bring the total raised by Twitter to over $150 million.
Rumors around the Valley had pegged the previous valuation of Twitter, following their second round, at in the $250 million dollars. We have therefore seen a fourfold rise in the privately set value of Twitter just in this year. Twitter’s traffic has been on a tear, and at least according to its investors, that traffic will soon be turned into a river of golden revenues to let the company meet its new lofty valuation.
All things considered, the reasons for Twitter taking on this new round of funding seem plain. Twitter had plenty of money before this round to survive comfortably for several years. But if they are to begin aggressively courting companies, and the like, Twitter will need a new team to go after those markets. That means they need to hire account managers, advertising types, and the usual MBA stiffs that are so prevalent at deals. Twitter needed more money to do all of that, and when better to raise money when your public stock has never been higher, the media treats you like a god, and you already have enough money to survive. As the old adage goes, the best time to raise money is when you do not need it.
Twitter has yet to corroborate any of this, but the Wall Street Journal seems confident enough in their reporting to allow us and everyone else to cover the news. Once Twitter makes a formal announcement, we will report on their notes.
