Twitter, the fashionable microblogging service, is set to close a round of financing of around $100 million that values the three-and-a-half-year-old start-up at $1 billion, according to a person briefed on the company’s plans.
The investors include Insight Venture Partners, a New York venture capital firm, T. Rowe Price, the mutual fund company, and the current Twitter backers Spark Capital and Institutional Venture Partners.
Twitter does not necessarily need the capital. It previously raised $55 million and says it has only spent $25 million of that cash. But the company has big plans to expand the service from its roughly 50 million current users and to ultimately catch up to Facebook — which recently reached 300 million members. Both of these companies believe they can one day reach a billion users around the world — nearly the entire current population of the Internet. The extra cash, this person said, will help the company keep up with demand and build out the service.
It is a good move for twitter to take the money while the frenzy lasts. It is a testament to their popularity that they are able to get such an insane valuation in this tough funding climate. I think they are way overvalued at $1B. The same goes for Facebook. Time will prove this right.
The only caveat to this funding is that they just bacame too expensive for anyone to acquire them. So their only exit hope now is an IPO. Good luck with that.