Twitter Wins $35 Million in Funding

Filed as Features on February 14, 2009 9:23 pm

Twitter bird sings money symbolsAccording to Advertising Age, Twitter just received $35 Million in new funding, in spite of no business model and claiming they really didn’t need the cash infusion:

Twitter has landed a reported $35 million in additional venture funding, despite the fact it still lacks a business model. The funding values the company at $250 million, according to news reports.

…earlier this week the micro-blogging service shrugged off speculation, based on a British news report, that it would start charging corporate clients. It would not, it said, start charging anyone for services that are currently free.

In fact, Twitter said it didn’t need the cash infusion — but the additional money was too good to pass up. “Our strong growth attracted interest and we decided to accept a unique opportunity to make Twitter even stronger with a very attractive offer,” the company said on its blog.

The story was also covered by the LA Times, saying:

Co-founder Biz Stone said the micro-blogging service still had money in the bank from two earlier funding rounds, which totaled $20 million, but Twitter received “an offer we couldn’t refuse.”

“Our strong growth attracted interest, and we decided to accept a unique opportunity to make Twitter even stronger with a very attractive offer,” he wrote in a corporate blog post titled “Opportunity Knocks.”

…Stone said the funding boost would go toward expanding Twitter’s 29-person staff, “and yes, to begin building revenue-generating products.”

Rumors have been flooding the online world with warnings of Twitter’s inability to continue financing their free microblog service, which had more fuel added to the fire from a recent Wall Street Journal article, referencing an interview with Marketing Magazine in the UK, where co-founder of Twitter, Biz Stone, said:

We are noticing more companies using Twitter and individuals following them. We can identify ways to make this experience even more valuable and charge for commercial accounts.

This set off a chain of speculation and rumors that Twitter was to start charging corporate users. In a blog post and tweet afterward, Stone corrected the misunderstanding and admitted that the news about “commercial accounts” got a head of itself with:

Twitter will remain free to use by everyone — individuals, companies, celebrities, etc…What we’re thinking about is adding value in places where we are already seeing traction, not imposing fees on existing services. We are still very early in the idea stage and we don’t have anything to share just yet despite a recent surge in speculation.

According to Twitter, their active users have jumped 900% in the past year. A report on Twitter usage from the Pew Internet & American Life Project found nearly one in five online adults ages 18 and 24 (19%) have used Twitter, increasing to 20% for online adults 25 to 34, part of the 11% of online American adults using Twitter or a similar service.

With the growing adoption of Twitter by celebrities and businesses, many are very dependent upon Twitter as part of their business marketing, networking, and communication activities.

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  1. By Chung Bey Luen posted on February 15, 2009 at 8:10 am
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    I think Twitter should speed up the process of making it profitable instead of just relying on funding.

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  2. By Miguel Wickert posted on February 16, 2009 at 2:21 am
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    No way, Twitter is fine. Congrats to Twitter. Anyhow, I think this is my first comment here at the site. Subscribed. :) Cheers!

    -Mig

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  3. By Cam G posted on May 25, 2009 at 1:35 pm
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    I love following the Twitter story. When I first read about it, I laughed thinking why would anyone want to have an on-line sms in effect – yep I was wrong.

    Then ok, I thought so Gen Y will use it, but I cant see how the business could use it – yep I was wrong again.

    Now, reading this you find out that they have no business model yet investors are throwing cash at them.

    Twitter to me now is an inspiration, they seem have in marketing terms tapped in to an unidentified market need, with out any idea of how to make money but have ended up doing so by simply staying true to their market. good luck to them, I hope they do well out it

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