Twitter snags 'significant' funding, looks to expand reach
- — 02 August, 2011 05:36
Twitter confirmed today that it has raised a "significant round of funding" that executives hope to use to expand the site's reach.
The company noted in a blog post this morning that the funding was led by the venture firm DST Global, with several previous Twitter investors participating as well. While Twitter did not specify how much funding was brought in, the Wall Street Journal's All Things Digital reported recently that Twitter was working to sew up an $800 million funding deal.
The Journal also reported that $400 million of that funding will be used to cash out current investors and employees.
Twitter declined to comment on the funding amount or what exactly it will be used for.
"We will use these resources to aggressively innovate, hire more great people and invest in international expansion," the microblogging company said in its blog post.
Dan Olds, an analyst with The Gabriel Consulting Group, noted that this is an important event for Twitter. "If the $800 million figure is correct, it values the company at around $8 billion," said Olds. "That's more than twice the valuation they had less than a year ago."
He also has some ideas of how Twitter should use such a huge influx of cash. "The first thing that comes to mind is that this gives them a mechanism to allow their employees to sell some of their stock and realize some of the wealth they've helped the company build," he said. "This is key in helping them retain key people and simply the right thing to do."
Olds also noted that Twitter refers to extending its reach, which could mean anything from expanding its IT infrastructure to strategic acquisitions.
"The one thing that this definitely does is ratchet up the pressure on management to come up with a business model that can throw off enough profits to support that $8 billion value on the company," he added "Right now, it's estimated that their revenue is around $200 million, which isn't nearly enough to justify an $8 billion value. They haven't yet figured out how to best convert their massive user base into a marketable commodity."
Twitter, however, used today's blog post to point out its growth momentum.
"Twitter continues to grow around the globe at a record pace," it noted in the post. "Just a year ago, we delivered 65 million tweets a day. Today, we generate over 200 million tweets per day. One year ago, there were approximately 150,000 registered Twitter apps. Now, there are more than one million that connect to Twitter."
Twitter also noted that its team of employees has grown from 250 people to more than 600 in the past year.