Tag Archives: IVP
No Profit, No Problem. Twitter Raises $50 Million.
The service that makes you blog at less than 140 characters and has built an ecosystem around it has raised additional funding. This round of funding is at over $50 million and is part of the third round.
This round of funding was put together by Benchmark Capital and Institutional Venture Partners. Considering Twitter’s 900% growth in a year, it is no surprise that these two venture capital firms wanted to be a part of it. Twitter wasn’t exactly planning on receiving additional investment since they still have money left over from previous rounds of funding. There could be a lot of money made for the VC companies if Twitter receives an acquisition offer for what they are currently being valuated at.
Facebook already reportedly threw a $500 million offer in their direction in the form of cash and stock, but Twitter decided to walk away. It may have been a good move since Facebook’s stock value has been fluctuating quite a bit between the internal numbers and the valuation that Microsoft based their investment on.
From a traction stand point, investing in Twitter makes sense. But many people are raising their eye brows based on the fact that Twitter does not have a revenue model. Many companies are starting to realize that just having advertising may not cut it in terms of a business strategy. I believe that if Twitter can ride through the recession they may not necessarily need a revenue plan. Why do I say this?
Here is a one word example: YouTube. Remember the time before YouTube got acquired for $1.6 billion? YouTube barely had any profit and was also being closely watched by major TV companies in terms of litigation. When Google bought out YouTube, Viacom quickly slapped them with a $1 billion copyright infringement lawsuit. Google still has trouble dealing with the monetization of YouTube. Google already knew this would be an issue at the time of the acquisition, but that did not stop them.
Now Google owns the number one video site in the world and has a hell of a marketing tool at their disposal. Google used YouTube to inform people about the Chrome web browser. Google Chrome gained quite a bit of market share for being a brand new browser.
This could be the same case with Twitter minus the litigation. Twitter is a major marketing tool that any bigger company could make tremendous use of. An investment in Twitter was probably the best that a VC could make right about now, despite the lack of a revenue model. No profit, no problem.
Categories Benchmark Capital, Institutional Venture Partners, IVP, Twitter
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Twitter Valuation To Be Worth $250 Million Soon?
It seems like whenever a major event happens that shakes the blogosphere, the Twitter community is the first to respond. This is true for the Obama’s inauguration, the recent terrorist attack in Mumbai, the Hudson River airplane accident, etc. Twitter is also becoming a marketing tool for celebrities. Now that Twitter is garnering so much more attention, it is only natural for the company to raise more funding to keep the traction going.
A source at TechCrunch has it that Twitter has signed a term sheet with at least one venture capital company, including Institutional Venture Partners, to raise a new round of funding that will put the company at a $250 million valuation. It is pretty likely that the company will raise over $20 million in VC money. Last May the company raised $15 million and the year before that they raised $5 million.
The big question here is whether major corporations believe Twitter is worth at least $250 million. Apparently Facebook did as they offered the microblogging service $500 million in cash and stock options that Twitter reportedly turned down. Facebook’s actual value has been questioned multiple times by multiple companies so it was pretty logical for Twitter to hold off for now.
Another problem Twitter has is the lack of a revenue model. Twitter’s servers are being hammered by the five million plus users that they have. Of these millions of users, none of them have to pay to use the service. This is a niche that Yammer, an enterprise Twitter-like service, filled in. If Twitter begins to charge for premium services, then it is pretty likely that people will start paying because many of the users have already established a reputation.
One thing that is for certain is that this new round of funding will keep Twitter running through the weak economy and may see itself being acquired when the acquisition market begins to heat up once again.
Categories Facebook, Institutional Venture Partners, IVP, Twitter
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Another Day, Another Advertising Acquisition. AOL Eyeing Quigo For $300 Million.
In September 2006, the month that Pulse 2.0 was created, I pointed out that New York-based Quigo was beefing up their client list and that in terms of advertising, the company would be able to compete with Google AdWords. Quigo Technologies is known for their AdSonar product. AdSonar provides contextual advertisements based on keywords from any given website, similar to Google AdSense.
Currently, Quigo provides services to ABC News, Hollywood.com, ESPN.com, Forbes.com, FOXNews.com, CareerBuilder.com, and USAToday.com. In June 2007, Time Inc. decided to choose AdSonar to power the advertising for their websites as well. Time Inc. is a subsidiary of Time Warner Company. Time Warner Company owns America Online. Technically, its a situation where the client wants to become the owner.
America Online is currently putting together a deal to acquire the advertising company for $300 million. Kara Swisher of AllThingsD broke the news.
Quigo raised a total of $45 million in funding from Steamboat Ventures, Highland Capital, Glenrock Ventures, IVP, and Meritech Capital Partners. Time Inc. executives predict that Quigo will bring in $100 million in revenues over the next 3 years.