Twitter investor: 'We didn't need the money'

LOS ANGELES--Twitter didn't rake in $100 million because it was about to run out of money, investor and board member Bijan Sabet of Spark Capital said in a panel at the 140 Conference on Tuesday morning.

There was still money left over, Sabet explained, from what the company had raised from Benchmark Capital and Institutional Venture Partners in February, which followed Twitter's Series C round in the spring of 2008. Twitter, according to Sabet, raised the money from Insight Venture Partners and T. Rowe Price last month because it wanted to grow up: hire new people, launch new products, strike partnerships, and the like. Contrary to Twitter's reputation for "fail whale" errors, Sabet insisted that the money wasn't needed for an emergency server shopping spree or anything. (Some may disagree.)

"The expectation when you raise a lot of money, it's a statement that you want to build a company, an independent company," Sabet said when moderator Robert Scoble asked him what he thought of the fact that Twitter has not yet put forth a long-term business model. "We didn't need the money...it was a very purposeful kind of commitment to try to make a company."

A billion-dollar valuation is pretty nice to have, too.

A correction was made at 2:13 p.m. PT: a source with knowledge of the deal confirmed that Twitter's April 2008 and February 2009 rounds of funding are considered to be separate rounds.

[kgsbca]

It's probably true they don't need the money. Yet. Seeing how they have no profit model, they will eventually need the money, and by that time it will be more obvious to investors that they have no viable business model.

But hey, Biz, what did you wife make for dinner last night? I didn't catch your tweet on that (there was an article in the NYT recently about how you tweeted on the great vegan lasagna she made). I'm sure that's gotta be worth a few million.

There are so many ideas that could benefit society if developed, and desperately need investment capital. twitter will prove to not be one of them, no matter how often cnet or morning talk shows mention them.

[sulleleven]

"A billion-dollar valuation is pretty nice to have, too."
exactly.

I had wrote:
"It looks like Twitter has raised another $100m. I think on the surface, it?s a mistake. On the other hand, the investment itself is strategic. Twitter spends money slowly. The investment almost works more to secure a valuation than it does to accelerate towards an exit strategy where investors profit."

- http://vocal.ly/pgg-

[gabrielbear]

once upon a time yhoo raised millions of $$--then left them in the bank rather than buy server farms etc as had been expected. that bank interest was yhoo's operating marign for a couple of years. the rest of its oeprations were at breakeven. at the time yhoo's market cap was larger than gm's.
the economic value of twitter is real time datamining, real-time disempowerment of talking heads on tv. ho many millions of watts of tv broadcast time about "let's find out what people are saying" is now obsolete?
how many attempts to influence political dialog with push polls are now dead as @xyz becomes the ultimate polling tool?
will it take a while to monetise? sure. does it matter? only to those who actually put the money in. is the valuation accurate? evidently so to those who put skin in the game, and their opinions can be counted.
as soon as twitter bashers think they have something with more social value in their own hands, they will be able to measure their opinion against the market.