I can’t quite figure out why, but someone has given Twitter $ 35 million:
Twitter has raised $35 million in venture capital, bringing the microblogging start-up’s total funding to $55 million.
The new money came from Institutional Venture Partners and Benchmark Capital. Peter Fenton, a partner at Benchmark who has also invested in Web 2.0 darlings Yelp and FriendFeed, will join the Twitter board.
The new capital for the San Francisco start-up comes on top of the $20 million it has raised from venture firms including Union Square Ventures, based in New York, and Spark Capital, based in Boston. The fundraising round brings in two top West Coast venture firms.
The company was not looking for new investors and still has money in the bank, said Biz Stone, a co-founder, in an interview. In December, Twitter C.E.O. and co-founder Evan Williams said that though he had originally planned to raise more money in 2009, when the economy turned, he decided not to. But the two new investors approached Twitter, Mr. Stone said, and “we went for it.”
Perhaps one of them asked the question that I can’t quite figure out the answer to; where’s the revenue going to come from:
Despite its growing popularity — active users have increased 900 percent in the last year, Mr. Stone said — Twitter has not earned a single dollar. It does not sell advertising on its site and is free for users. The company plans to slowly roll out a revenue plan over the next few months. That will likely include charging businesses for certain features they can use to talk to customers on Twitter.
Here’s the problem I see in that, though; Twitter has rapidly developed a culture all it’s own and, like other social media sites and the Internet itself, there seems to be a pretty strong bias against any form of advertising. Moreover, not only does Twitter not charge for it’s service, but you don’t even have to go to the Twitter.com home page to use it — there are any number of free clients like Twitterfox, (a Firefox addon) Tweetdeck, (a stand-alone client) and Twitterberry (a Twitter client for Blackberry smartphones) that allow you to have all the functionality of Twitter without visiting their website. That means on-site advertising would likely not be profitible.
I’ve come to enjoy Twitter and use it for a variety of things, but if it were selling stock to the public, I sure as heck wouldn’t buy it.
