Twitter Raises $20 M? That's News, Why?
Twitter has raised between $15 m and $20 m according to Cnet. Twitter's next round of cash has been a subject of much blogging and speculation and scrambling around trying to get the scoop. I haven't been doing any of that, frankly. Because "scoops" are only interesting when they're surprising and Twitter raising a fat round of venture capital is in no way surprising.
Four reasons follow on the jump.
1. As I've reported in the video below:
and in this column and ad nauseum, anyone who remotely has a good Web business is bulking up on cash. Six Apart essentially did it with the sale of LiveJournal. Slide has done it. Ning has done it. Facebook has done it. Federated Media has done it. Glam has done it. Do I need to go on? Digg will do it or get bought. (video exhibit B, below)
Far too many companies did not do it in 2000 thinking this whole downturn was a temporary phenomenon, then 9/11 hit and anyone who hadn't bulked up was completely screwed. No one wants to do that again and there's so much money sloshing around between VC firms and Wall Street institutions even marginally good companies can still get amazing terms.
2. If you read between the lines Evan Williams has essentially previewed this deal. (see video exhibit C, below)
3. Given it makes sense for Twitter to raise money, there's the question of whether it can. Of course it can. Anyone even bringing up that the lack of business model may be a problem has no basic understanding of how Silicon Valley and the venture system works right now. As is written about to death in my book, venture capitalists largely missed out on the most lucrative stakes of all Web 2.0 successes. They were afraid, and the companies were afraid of them post-1990s. Companies were so lean they could bootstrap themselves, only raising money when they were worth enough that the so-called "early stage" rounds bought VCs far less equity than in the past. Enter Twitter which is the last interesting, innovative company to come out of the early 2000s Web 2.0 fertile crescent. Wake up VCs! You missed MySpace, you've missed Facebook, you've missed Ning, you've missed Slide. OMG! Twitter is actually raising venture capital??? WHERE DO I SIGN THE CHECK!?
4. Twitter is on the verge of potentially going mainstream in a big way. Last stop before outrageous valuation! There is no business model. And Twitter is so beautifully simple that is a huge problem for the company. But it's not a right now problem. Facebook and Slide haven't hammered out their business models yet either and look at their valuations. At any price, a stake in Twitter-- not to mention a chance to cozy up to a true Web visionary in Evan Williams-- is a steal.
So now that I've wasted a long post telling you why....yeah, nothing to see here. Move along.
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