Twitter Raising New Cash At $250 Million Valuation
Twitter, which just recently turned down a half billion dollar acquisition offer from Facebook (albeit to be paid mostly with Facebook stock), is dipping back into the venture capital market, we've heard from a source with knowledge of the deal.
Context & Ripple Effects
The reported financing follows an April 2008 debate over how Twitter should be valued as it sought capital. By January 2009, Twitter had also hired a revenue chief, launched a revenue-model contest, and surpassed Digg in traffic, tying its funding story more closely to commercialization.
The reported $250 million valuation also frames venture funding as an alternative to Facebook's unsuccessful acquisition approach, rather than a simple bridge to a sale.
First-order effects
- If the reported round closes at the cited valuation, Twitter gains venture backing while establishing an independent price benchmark for the company.
- Twitter's new revenue leadership and public search for business models face greater pressure to translate audience growth into a financing case.
Second-order effects
- Facebook's failed acquisition approach becomes a reference point for Twitter investors weighing an equity stake against the value implied by a strategic buyer.
- A venture valuation gives later investors and potential acquirers a clearer negotiating anchor, shifting attention from Twitter's traffic growth to the durability of its revenue plans.
Third-order effects
- The episode points to frontier consumer-web companies using private financing to preserve independence while converting growth metrics into increasingly formal valuation benchmarks.
The trend: High-growth social services are using venture rounds to set independent valuations, reducing the need to treat strategic acquisition offers as the only path to liquidity.