New Funding Raises Twitter’s Value To $1 Billion
Posted on: Thursday, 17 September 2009, 12:20 CDT
Technology news site TechCrunch revealed on Wednesday that Twitter is closing a round of funding that will value the company at $1 billion, Reuters reported.
TechCrunch cited multiple unnamed sources that said Twitter Chief Executive Evan Williams told employees about the funding round that will raise around $50 million.
Twitter has yet to comment on the decision.
Benchmark capital led a February round of funding that had valued the company at around $250 million, TechCrunch said.
It has been an uphill struggle for Twitter and other social networking sites to show that they are viable businesses and that they have what it takes to eventually make a successful public offering or private sale.
comScore data showed that worldwide visitor's to Twitter's website reached 44.5 million in June, up 15-fold-year-over-year. However, the micro-blogging site has only recently begun to focus on ways to make money from its free service.
Salil Deshpande, a general partner at venture firm Bay Partners, said when something like Twitter or Facebook becomes a cultural phenomena, it's much more than the sum of the parts.
“It's really tapping into a cultural shift. As the network effect increases, the value increases,” he said.
News junkies, Hollywood watchers and many investors have made Twitter the newest social networking phenomenon. Users publish Tweets, which are 140-character text messages published to subscribers known as 'followers'.
Twitter became an important campaigning tool for both U.S. President Barack Obama and Senator John McCain during the 2008 presidential campaign.
Twitter users can also use the site’s real-time search engine to cull through the morass of Tweets and find the latest information about any topic being discussed by Twitter users. Google Inc's search of the entire Web, for instance, is based on slightly dated information.
Twitter could eventually follow Google's lucrative paid search business by running ads alongside its search results.
The San Francisco-based company revised its terms of service last week to state that its service could contain ads that, among other things, target "queries made through the services."
While Twitter's co-founder Biz Stone has stated he would welcome any opportunity to work with Google, Google Chief Executive Eric Schmidt has referred to Twitter as "poor man's email".
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Source: RedOrbit Staff & Wire Reports
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