Investment Values Twitter at $8 Billion
While Twitter isn't rushing to go public like some of its larger peers, the micro-blogging service doesn't lack investor interest. — The San Francisco, Calif.-based start-up is in the process of raising $400 million dollars …
Context & Ripple Effects
Twitter's valuation has doubled in seven months. In December 2010 it closed a $200 million round at a $3.7 billion valuation after a bidding war that had already pushed talk toward $4 billion ([[a:1189177]]); this new $400 million raise at $8 billion prices that same company twice over before it has gone public. As far back as 2008, Silicon Alley Insider was asking what the service was worth at all ([[a:1183296]]) — the answer has kept compounding.
The raise lands amid a deliberate tightening of Twitter's platform posture: it quietly shut down the tweet firehose piped to Google, completed the BackType acquisition to build publisher tools, began rolling out t.co link shortening on Twitter.com, and plans a dedicated developer site this month per company officials.
First-order effects
- Twitter banks $400 million of growth capital without an IPO, giving it runway to fund product and infrastructure while rivals like LinkedIn trade publicly.
- Existing investors mark their stakes at roughly double the December 2010 price, validating the late-2010 bidding war rather than cooling it.
Second-order effects
- Shutting the Google firehose while raising at $8 billion signals Twitter intends to meter access to its data as a paid asset, forcing search partners and analytics firms to negotiate licenses or lose real-time coverage.
- Publishers gain an in-house partner team via BackType, pulling third-party toolmakers into competition with Twitter's own platform group.
Third-order effects
- If private buyers keep repricing consumer social companies at multiples of their last round within months, late-stage private capital becomes a substitute path to scale that delays — and reshapes — the IPO market for the sector.
- Control of the real-time data stream is emerging as the core monetizable asset of social platforms, with open firehoses giving way to licensed, permissioned access.
The trend: Consumer social platforms are funding themselves through ever-larger private rounds while converting once-open data access into a controlled, licensable asset ahead of any public listing.