Valued at $7B, Twitter Seeks Private Funding

By Erin Harrison July 07, 2011

Bucking what appears to be the latest trend for growing social media companies, Twitter is tapping private investors for another round of funding – instead of going the initial public offering route as we’ve seen most recently with LinkedIn.

According to media reports, San Francisco-based Twitter could be valued as high as $7 billion, but it remains to be seen which investors will participate in this next round of capital.

“The fast-growing Internet messaging service is currently in discussions to raise a new round of private financing, said people familiar with the matter. The round could yield hundreds of millions of dollars and value Twitter as high as $7 billion, one of these people said. It is unclear which investors are participating in the new round,” reported The Wall Street Journal.

Seven months ago, Twitter raised $200 million in a financing organized by venture-capital firm Kleiner Perkins Caufield & Byers, valuing Twitter at $3.7 billion, according to news reports.

In May 2011, LinkedIn had a successful IPO opening at $45 and closing at $93.09, valuing the company at about $9 billion. TMC CEO Rich Tehrani noted the reason why some Internet companies are going the IPO route, especially considering only a few heavyweight investors can back Twitter and Facebook.

“There are countless investors locked out of investing in Twitter and Facebook and LinkedIn is the only way for these people to get into the social networking investment game,” Tehrani blogged. “Finally, the tech space has done extremely well this past year – so one can easily argue that many tech investors have made a killing and are confident they can continue to do so.”

Twitter’s growing user base may be appealing for investors, but ad revenues may not be enough to impress this time.

“Though Twitter has a growing user base, its ad system remains fledgling,” the Journal pointed out. 

Twitter, which was launched five years ago, has more than 200 million registered user accounts, and is currently on pace to produce about $150 million in ad revenue this year, according to research firm eMarketer, up from $45 million last year. 

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2011, taking place Sept. 13-15, 2011, in Austin, Texas. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It’s also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. To register, click here.

Erin Harrison is Executive Editor, Strategic Initiatives, for TMC, where she oversees the company's strategic editorial initiatives, including the launch of several new print and online initiatives. She plays an active role in the print publications and TechZone360, covering IP communications, information technology and other related topics. To read more of Erin's articles, please visit her columnist page.

Edited by Jennifer Russell

Executive Editor, Strategic Initiatives

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