No money? No problem! Twitter doesn't have any actual revenues, but venture capitalists have poured another $35 million into its coffers, valuing the text-update service for hipster oversharers at $230 million.
It is an unprecedented amount for a company unburdened by the messy reality of taking money from paying customers. Twitter has raised more than $20 million in two previous rounds of financing. And its new investors, which include Benchmark Capital, an early backer of eBay, and IVP, a less distinguished Silicon Valley financier, are only getting 15 percent of the company for their $35 million, a much larger amount than rumor had Twitter raising. Here are bullet points from an email that Twitter CEO Ev Williams (above) sent to investors:
* Twitter has raised a new round of funding from Benchmark and IVP
* Yes, the round was $35M
* Major existing investors include USV and Spark
* Existing investors also includes CRV, Digital Garage (from Japan), and an impressive stable of angels
* Benchmark's Peter Fenton will be joining Twitter's board of directors
* Twitter is committed to building a strong, independent company
Cofounder Biz Stone claimed in a blog post that the company had "significant capital" from last year's $15 million round with Spark and USV. Translation: Twitter has spent a large part of that sum in the past nine months — but it's not completely broke.
A strong, independent company is a longshot, considering that Twitter must pay cell-phone companies to deliver its short text updates to users' cell phones, while not pulling in compensatory revenues. Twitter's best hope is a buyout — and what its investors have just done is give it a better hand to bluff with, until it suckers some larger Web company into figuring out how to turn Twitter's 140-character-long updates into cash.