NEW YORK—First came Facebook. Now, micro-blogging Web site Twitter is opening eyes due to its monetary potential.
According to TechCrunch.com, at a recent all-hands meeting, Twitter CEO Evan Williams disclosed to employees that the company had secured $50 million during a round of new investments. The shocker? Its $50 million investment is based on valuing the company at a whopping $1 billion.
The investor was New York-based venture capital firm Insight Venture Partners, sources told TechCrunch.
In February 2009, Benchmark Capital and Institutional Venture Partners invested $35 million in the web startup, based on a valuation of $250 million for the company. In a mere seven months, Twitter’s worth has apparently quadrupled.
This investment validates two things—the investors obviously expect Twitter to continue to grow at its current pace, and they expect Twitter to eventually make money.
But how exactly will Twitter make money? That is the conundrum facing its management and investors.
Currently, Twitter gets revenues from advertisers on its mobile applications for Apple’s iPhone and Research In Motion’s BlackBerry handheld devices. But there’s nary an ad on its home page (http://www.twitter.com/).
One way to generate funds is to partner with businesses and corporations, which it has already begun to experiment with. It could charge businesses a fee to send out special offers, coupons, promotions, and marketing materials to Twitter account users. In fact, Twitter’s concept can be used by almost any business or organization to quickly get its message out to customers or users.
Another way is to sell Twitter applications to mobile OS developers as a built-in application. Due to its popularity, mobile devices with a built-in Twitter application could attract younger consumers familiar with the service.