Are you in? Twittering money away…

What are you doing? Not so much. Just getting a new hundred mil.

Breaking News: Twitter to Raise $100 Million From Insight, T. Rowe Price, Other Investors

By Deal Journal

The WSJ’s Michael Corkery and Jessica E. Vascellaro report:

Twitter, the messaging web site that has become an Internet sensation, is nearing a deal to close as much as $100 million of new funding from as many as seven investors, according to people familiar with the deal.

The investor group includes mutual fund giant T. Rowe Price and private-equity firm Insight Venture Partners, which are new investors to Twitter. The $100 million investment is about twice as much as Twitter was reportedly expected to haul in this latest round of fund-raising.

Other investors in this round include venture-capital firms Spark Capital and Institutional Venture Partners, which have previously invested in Twitter.

The investors are valuing Twitter, which has yet to generate revenue or finalize its plans for making money, at about $1 billion. A person familiar with the deal said investors are applying a similar value to Twitter as that applied to Facebook, which at one point was valued at $15 Billion. By some estimates, Twitter is expected to have 25 million users by the end of 2009. Facebook has 300 million users.

Twitter could not immediately be reached for comment.

The Twitter valuation is quite a lift from the company’s last round of investing earlier this year, in which investors valued the company at around $255 million, according to people familiar with the matter.

The company still isn’t generating any real revenue, though executives say they are discussing various options, including advertising and premium services targeted at businesses.

The deal is expected to close today. It is Twitter’s third and largest round of fund-raising.

Selected comments from WSJ readers: http://blogs.wsj.com/deals/2009/09/24/breaking-news-twitter-to-raise-100-million-from-insight-t-rowe-price-other-investors/tab/comments/

Leaves me wondering two things: what’s the use of proceeds for $100M and what’s the exit strategy for these investors.

In terms of dollar value per tweet, how much is it?

here we go pop ups on twitter

100 million for a company that has no significant revenue or a proposed revenue model. It reminds me of 1999 where an idea that involved the internet could result in funding. In addition, what will the funds be used for?

Twitter is big and has gained a lot of mind share but it could evaporate just as quickly. The service is easily replicated (low barriers to entry and exit) and has little or no switching cost. There will be competitors in the future and then the typical consolidation. Not worth my 100mil.

Makes you wonder if the latest round of investors can see this company justifying such a valuation on cash flow fundamentals and the potential to generate oodles of free cash in the future, or whether they’re just investing in the Greater Fool theory and hoping they’ll exit to someone who’ll come up with an even more stupid valuation.

Don’t forget that that buyers of Web 2.0 companies have tended to write off much of what they paid only a couple of years later, which isn’t a problem because they are rarely if ever held accountable for destroying shareholder value on acquisitions that – to any sane outsider – are obviously and massively overpriced.

The real point is this…inflated valuations mean founders get rich, VCs get rich, advisers get rich and lots of other companies go up in value, meaning their founders, VCs and adviers will also get rich. The value that gets destroyed belongs to some nebulous “shareholders”, ie fund managers investing someone else’s money (and probably with little or no accountability). So while the initial wealth creation is very direct and tangible for those concerned, the subsequent wealth destruction is much more distributed and less tangible.

Really….this is the emperor’s new clothes…what’s so great about Twitter? I’m not a fan of myspace or facebook…but I can do everything there I can do on Twitter and a lot more. Good luck making your money back folks.

T Rowe Price again…? Must be buying in w/ their huge exit from Slide, that other breakout SF startup which they valued 550M at one time. Good job fellas… keep the money trucks heading west.

25 million users are worth 1bn?!? what a joke!

With some of the additions to video capable phones and add on services like Vidly.com, the ability to get a clip to followers is impressively quick. It continues to expand the “citizen journalism” trend. Not everyone has the time to post to a blog or manage a complex myspace or facebook page, but sending 140 or less plus photos or video to Twitter takes less than a minute and can be done on the run from the a cellphone.
Vidly example: http://is.gd/3Dx44

As for marketing … I’ve venture to guess that commercial users will see their cost rise as they grow their base of followers?

Here is a tool to calculate a website value(Calculated twitter value too):
http://www.how-much-is-my-website-worth.info/

Tweet this: “Twitter could not immediately be reached for comment.”

My comment: Hmmm… seems like the smart money is on Med Research Rising, not on Twittering Tweet. But, the ponies are still in the paddock, so who really knows?

What surprises me is how easy money is to come by now, almost but not quite a year from the time we all were ‘on the brink, staring over the cliff’. Remember when the banks were all broke and you couldn’t get a used car loan? And now people are lining up to give money to another ‘dot.something’ experiment with absolutely no revenue. Maybe it’s one of those hidden underground streams?

Funny, I just finished reading “The Devil’s Candy”, the well-told story of the making of the movie that was loosely based on Tom Wolfe’s book, “The Bonfire of the Vanities”. Who cares, that was almost 20 years ago, right?

Ah, heck, I just went over my tweet limit by 689 characters!