A fresh $200 million investment into Twitter has valued the microblogging company at $3.7 billion, less than a year after it began its first serious efforts to make money.
The funding, from Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers and existing Twitter investors, underscores the high hopes that investors have for the company.
"It's a huge multiple. But the idea is that (Twitter's) scale can be monetised," said BGC Partners analyst Colin Gillis, who estimated that Twitter's annual revenue was currently under $100 million.
The money will help Twitter expand the company, CEO Dick Costolo said in a post on the Twitter blog. "The experience these new directors bring to Twitter, along with this renewed investment, will help us continue to grow as a company and business," Costolo said.
Twitter had 175 million users as of September. "In the past 12 months, Twitter users sent an astonishing 25 billion Tweets and we added more than 100 million new registered accounts," Costolo said. "In that time, our team has grown from 130 people to more than 350 today."
The $3.7 billion valuation is heavily overshadowed by social networking rival Facebook, which is valued at more than $45 billion, according to Sharespost, an online exchange for trading shares in private companies.
IPO?
BGC's Gillis said Twitter's new valuation could push an IPO further down the road, as Twitter would need to "grow into the valuation" and generate more revenue to justify it to public market investors.
But Caris & Co analyst Sandeep Aggarwal said he believed Twitter could be an IPO candidate as soon as 2011, particularly as the company could need more funding to capitalise on new opportunities. "These companies are hungry for resources," said Aggarwal.
Costolo told Reuters in May that Twitter planned to have hundreds of advertisers using its ad system by the end of the year. He said the company's previous valuation of $1 billion meant that it was incumbent on Twitter to develop a business that can generate hundreds of millions of dollars of revenue.
Read more: Twitter valued at $3.7 billion | News | PC Pro
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