New Twitter Funding
There's a lot of talk today about our financing. Yesterday we closed a significant round of funding with a group of investment firms that we're excited to publicly thank: Insight Venture Partners, T. Rowe Price, Institutional Venture Partners, Spark Capital, Benchmark Capital, and Morgan Stanley.
Context & Ripple Effects
This round closes a two-day arc that began when Deal Journal reported a $100 million raise led by Insight Venture Partners and T. Rowe Price — and confirms the investor list Twitter itself now names: Insight, T. Rowe Price, Institutional Venture Partners, Spark Capital, Benchmark Capital and Morgan Stanley. It is Twitter's third major raise in under eighteen months, following the April 2008 round, and the first to bring mutual-fund and bank balance sheets onto the cap table alongside classic VCs.
The syndicated reaction frames what is contested here. MediaMemo reports early backer Union Square Ventures chose to sit this round out — an unexplained absence from a company it backed earliest — while Hitwise's "Twittered Out?" piece questions whether growth justifies the price, and Chris Dixon's post argues deals like this one are evidence of traditional venture capital's declining grip on hot consumer companies.
First-order effects
- Twitter gains roughly nine figures of fresh capital and, with T. Rowe Price and Morgan Stanley inside the round, access to public-market-scale patience that lets it keep building product without monetizing on a VC fund-cycle timetable.
- Union Square Ventures' absence means the round re-prices ownership away from Twitter's earliest backers toward late-stage institutions — a real dilution of founder-era influence on the board dynamics going forward.
Second-order effects
- Rival consumer web startups now have a fresh comparable: if mutual funds will pay this mark privately, every founder's next raise gets pitched against Twitter's terms rather than against public comps.
- Late-stage specialists like Insight and crossover buyers like T. Rowe Price crowd the same deals seed firms used to win, forcing earlier-stage investors like Benchmark — which did participate here — to defend their position by doubling down on the few breakout names they already hold.
Third-order effects
- If mutual-fund money keeps substituting for IPOs, consumer internet companies can stay private far longer, shifting the liquidity event from the public markets to successive mega-rounds — a structural rewrite of the venture model Dixon says is already in decline.
- Valuations detached from current traffic metrics (the question Hitwise poses) become normalized, making sentiment-driven repricing risk a permanent feature of private consumer tech.
The trend: Private consumer internet financing is shifting toward large crossover rounds led by mutual funds and banks, extending companies' private lives and eroding traditional venture capital's hold on breakout deals.