A Word On The Twitter Financing
July 30th, 2007 | Categories: blogs, financing, networks, social media, strategy
Word around the blogosphere is that Twitter is close to closing a round of financing. Michael Arrington estimates the round to be somewhere in the $1-5 million range. That seems a bit low given the amount of buzz and attention the company has been getting over the past 6 months. I would have expected a larger round, but this smaller round does make sense when you think about it.
The smaller the round, the less diluted the company becomes. The founders can retain majority ownership and control. Furthermore, I am guessing that only a small amount of capital is needed to take the company to the next level. After all, Twitter is a micro-blogging service. How much does it really cost to run a company that facilitates the dissemination of short text messages?
I think that a small round is a very smart move by the company. I assume that many were expecting a gargantuan round, only to be disappointed. By minimizing the influx of funds, Twitter can spur growth and still maintain company unity. The next round of financing will probably be a different story with a whole new set of challenges.