There's no immediate cash crunch, but the messaging Web site (that's how the WSJ describes it) is clearly looking to play catch-up with Facebook - and in the process to make the company more attractive to potential advertisers. On that point, Twitter, Facebook and all the other social networking sites face the same challenge. (It's a point addressed in my piece on MySpace that appears in the October issue of Los Angeles magazine.) The new Twitter investors include Insight Venture Partners, a NY venture capital firm, T. Rowe Price, and the current Twitter backers Spark Capital and Institutional Venture Partners.
Perhaps more noteworthy than the additional $100 million is the company's revised valuation of $1 billion. From the WSJ's Deal Journal:
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.
My LA magazine column isn't available online, but Here's a relevant snippet from LA magazine piece:
So far, users of social networking sites aren't tuned into ads, which is why the click-through rate has been so low. "Television advertising is mass to mass," says Chris Anderson, editor-in-chief of Wired magazine. "Coke ad against American Idol. OK, but what do you put against a cat video? What do you put next to your favorite soldering video?" In talking to a bunch of experts in the social media world--smart, ambitious entrepreneurs who deal with these kinds of questions all the time--I kept hearing the same three letters: TBD. I'm not a big fan of To Be Determined strategies; it's an unsettling throwback to the tech boom of the late 1990s, when other smart, ambitious entrepreneurs insisted that it was all right not to have a business model and to lose gobs of money because in due course profits would keep pace with concepts.