Business Models Are Overrated! Twitter Raises Another $35 Million
by Peter Kafka
Posted on February 13, 2009 at 11:35 AM PT
See! Twitter did have news to report this week–but not about its elusive business model. The Web 2.0 microblogging-messaging platform everyone (or at least some of us) loves to obsess about has raised another $35 million.
Twitter has added Benchmark and Institutional Venture Partners to its list of investors, the company announced via a blog post today. Spark Capital and Union Square Ventures, which had previously invested in the company, have re-upped as well.
No details, of course, from Twitter about its current valuation. Last month the company was looking at raising $20 million or so at a valuation of $200 million to $250 million, and I’m told the new value is on the high side of that range.
The last time Twitter raised money, a little more than a year ago, investors pegged its value at just under $100 million. What’s changed since then? Well, it still doesn’t make any money. But it has many more users: The company says active users have increased 900 percent in the last year; comScore (SCOR) says the site’s home page now attracts 2.6 million unique a month, up 1,362 percent over the last year.
Anyone who’s ever read anything about Twitter knows that the company still has no revenue and/or business model–I just mentioned it one paragraph ago! So no need to go into that here. But for the record, note that co-founder Biz Stone, at the end of his funding announcement, says the company will indeed use some of its new money to go make…money: “We are now positioned extremely well to support the accelerating growth of our service, further enable the robust ecosystem sprouting up around Twitter, and yes, to begin building revenue-generating products.”
And for a nice summary of the company’s promise and peril, check out this week’s New York magazine. Money quote, literally, from CEO Evan Williams: “We have a product, and we’re working on it,” Williams said, with more than a hint of exasperation. “The money will come.”
Comments
You sound like the banks.
Posted by Rick Falls at February 16th, 2009 at 10:38 amIf we waited for everything to be proven profitable before we invest, why should we share in any of the rewards. Risk equals reward is a basic economic principle. Let’s face it they’ve got a lot of eyeballs on them. That’s more than the whiny newspapers can say as they crash and burn.
No, actually, I don’t think this is the end of the world. Venture investing by definition involves risks and bets on unproven ideas. Like many others, I’m having a hard time thinking of how exactly Twitter will turn a fast-growing Web service into a a fast-growing business (and like some others, I’ve become tired of pointing that out). But if they do, the folks who bet on them win big. That’s the deal.
Posted by Peter Kafka at February 16th, 2009 at 6:49 pmCharge for access to a commercial API. That’s the deal.
Posted by Jonathan Marcus at February 17th, 2009 at 9:37 am