Twitter Considered Acquiring GroupMe Before Bidding War Began

By Beecher Tuttle November 09, 2010

Twitter was mulling over the idea of acquiring the New York-based startup GroupMe before a fast-moving funding war between venture capitalist firms drove the price to an untenable level, an unnamed source told Business Insider.

GroupMe, which created a service that lets users text groups of people using one mobile phone number, was only launched this summer but has already made a name for itself in the technology space. VC firms were eager to invest in the company because of its impressive growth chart, which the source referred to as "nuts – thousands of percent." GroupMe's early success is particularly remarkable considering it is not the only company to offer such a service. Analysts speculate that the startup's service has become a hit because it is compatible with all phones, not just handsets that run on operating systems owned by Apple and Google.

After all was said and done, the startup raised a round of funding that will put its valuation somewhere around $30 million, according to All Things Digital. The second round of funding was led by Khosla Ventures, although other major VC firms were said to have expressed interest in investing in the company.

The bidding war became so competitive, one investor allegedly flew to New York over the weekend to make a personal appearance in front of GroupMe's management team, according to Business Insider. The startup apparently had multiple term sheets to choose from before deciding to go with the package put together by Khosla Ventures. Other VC firms that were said to be under consideration include Sequoia, Andresseen Horowitz, General Catalyst, Flybridge and Union Square Ventures.

While Twitter considered acquiring the startup a few weeks ago, the bidding war killed any potential deal. The company has decided to replicate the service internally and market it on its own. 

Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf

TechZone360 Contributor

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