$80 Million of Investment for Twitter

The micro blogging and social networking service, Twitter, based in San Francisco, CA which was founded in 2006, announced that it has had an investment of $80 million from Andreessen Horowitz, a Silicon Valley venture firm, by purchasing stocks in the private secondary markets. Still, the money does not go directly to the company, due to the fact that Andreessen Horowitz made the purchase through the private secondary markets. This connects early investors and the company employees that are able to sell their privately held shares with the outside investors.

This purchase through the secondary markets have attracted a controversy and a regulatory analysis and became a way for the venture capital companies to invest in a start up company without having a multifaceted and spirited funding bake off. The Andreessen Horowitz action was not a part of the $200 million round of funding that was made at the San Francisco social networking company, which was led by Kleiner Perkins, valued the company at $3.75 billion.

Some say that the venture firm acted in this way due to the fact that it has already began to invest in other key companies from the social space, such as the location focused Foursquare, gaming giant Zynga, social networking company Facebook and the local discounting Groupon, so Andreessen Horowitz owns now shares in these successful companies.

With this last $200 million round of funding, Twitter said on the blog that “Growth is fun. In the past 12 months, Twitter users sent an astonishing 25 billion Tweets and we added more than 100 million new registered accounts. In that time, our team has grown from 130 people to more than 350 today.” This investment for Twitter thus makes sense. Andreessen Horowitz is still trying to create a rewarding business model for itself, is focused on the advertising side.

Twitter, a company with more than 175 million users, is one of the fast growing internet social networking services, which include also Zynga and Facebook, the number 1 in the world internet social networking companies, that has a present valuation of around $50 billion. Even though Twitter is a very popular and successful growing company, Andreessen Horowitz is taking a lot of risk, a thing that most venture capital firms do best.