Twitter is now worth $1 billion
Imagine it on the BBC’s Dragon’s Den show. Peter Jones et al have just heard a pitch from for a couple of geeks asking for a $100 million investment in their dot-com business which since its conception three and a half years ago, has:
- Made no money
- Can’t demonstrate a business model that will generate revenue in the future.
- Appears to be nothing more than a glorified instant messaging system
- Relies on third-party developers to build applications so that its system is more useable.
- Gives away its API for free
- Has already sucked in a load of venture capital investment to the tune of $50M with no return
Picture Deborah Meadhen’s face at that one. Not a force to be toyed with!
“Just so you know where I stand — I’m out” would be the cry from the Den.
$100 Million
However that’s exactly what the owners of San Francisco based Twitter have managed to raise within the last week from a number venture capital investment firms including T Rowe Price, Institutional Venture Partners, Spark Capital, Insight Venture Partners and Benchmark Capital.
In proper money $100 million equates to about £62.4 million, still a ludicrous amount of cash; which brings the valuation of the service up to about $1 billion.
That’s a billion dollars! A billion dollars for a company that doesn’t actually produce anything! Nuts!
Whaaaaaaat?
That’s more than General Motors was worth before it went down the tubes and more than the Dominos Pizza chain, which had worldwide sales of $1.4 billion last year.
What’s Twitter’s revenue? Zero, zilch, zip!
The world is going mad again.
Surely if Twitter is worth a billion dollars and makes no profit, how much is my business worth that does?
Dragon’s Den Pitch
So here goes;
“Dear Deborah, I have an idea for a web based service that won’t make you any money, you won’t understand how it works and it’ll take a few years to catch on. Can I have £1 million please?”
Do you think it’s worth a try? I’d be a twit not to.
Great post! I have just finished reading the article in The Sunday Times recently about Twitter getting this investment — and it makes no money — and it’s not in a rush to! It will be interesting to observe how the investment can be justified in the months to come.