Twitter Appears Set to Raise $100 Million, Valuing It at $1 Billion
SAN FRANCISCO — Twitter has trained people to compress their thoughts into 140 characters and given a public stage to both dissidents in Iran and voluble stars like Shaquille O'Neal. — Now the start-up appears to have chalked up another achievement.
Context & Ripple Effects
Twitter’s prospective round follows a January funding report pegging the company at a $250 million valuation and a September report that placed its next round at $1 billion. The company has also confirmed a new funding round, while reports of a $100 million amount and $1 billion valuation remain unconfirmed.
The financing matters because Twitter has built a public communications venue used by figures ranging from Iranian dissidents to Shaquille O’Neal, yet faces a documented push to establish revenue. The investor group brings institutional capital behind a service whose influence is outpacing its business model.
First-order effects
- Twitter gains a confirmed new financing round and backing from Insight Venture Partners, T. Rowe Price, Institutional Venture Partners, Spark Capital, Benchmark Capital and Morgan Stanley.
- The reported $100 million raise and $1 billion valuation, if finalized on those terms, give Twitter more room to fund growth while it is under pressure to generate revenue.
Second-order effects
- Twitter’s existing venture backers and new institutional investors become more exposed to the company’s ability to translate broad public use into a durable business, concentrating attention on monetization rather than audience growth alone.
Third-order effects
- The round points to a market in which influential real-time communication services can command large private valuations before revenue is established, shifting the competitive test toward whether scale can be converted into an economic model.
The trend: Social communication platforms are attracting institutional financing on the strength of cultural reach and network scale ahead of proven monetization.