Once a company has raised hundreds
of millions of dollars at record prices the role of the early stage investors
is often overlooked. So would it be with Twitter, except for the fine work of
journalists such as Peter Delevett of the San Jose Mercury News and Nick Bilton of
the NY Times, who combine their memories with excellent
research and fine reporting skills.
In June 2007, Evan Williams was
looking for investors for a quirky Internet communications service called
Twitter that he had co-founded and funded.
He had already signed up a number of
well-known Silicon Valley financiers, but he also dashed off a note to his friend
Dick Costolo, who had just sold his company to Google, asking if he would like
to put in $25,000 or $100,000.
“I’m on the $25k bus,” Mr. Costolo
replied three minutes after receiving the e-mail. “Thanks Ev, this will be a
lot of fun.”
Mr. Costolo, who is now the chief
executive of Twitter, is one of a handful of individual investors who stand to
reap the rewards of a potential initial public offering of stock in the social
network. Although many details are still unclear — most of all the offering
price of Twitter’s stock. Mr. Costolo’s initial investment is probably worth
more than $10 million, with additional shares he has received as an executive
worth many millions more, according to people knowledgeable about the company’s
finances.
In
July 2007 Twitter, then 16 months
old, raised $5 million from Charles River Ventures, Union Square Ventures and
angels including Ron Conway, Chris Sacca, Marc Andreessen and Dick Costolo.
In
May 2008 Twitter ups the ante
with $15 million. Union Square ponies up again, as do Amazon CEO Jeff Bezos and
Digg Founder Kevin Rose, among others.
Later rounds were primarily
institutional. In December 2011, the Saudi
prince Alwaleed bin Talal invested $300 million in
Twitter. The company was valued at $8.4 billion at the time.
Additional Angels may own Twitter
stock as a result of Twitter’s purchase of TweetDeck for $40 million in May, 2011.
TweetDeck
was originally developed by Iain Dodsworth, and launched on July 4, 2008.
Dodsworth received his initial $300,000 seed
funding a year later from The Accelerator Group, Howard
Lindzon, Taavet Hinrikus, Gerry
Campbell, Roger Ehrenberg, betaworks, Brian Pokorny, and Bill Tai. The company raised
a Series A
round of funding with many of these same investors, and Ron Conway,
Danny Rimer, and the SV Angel group.
Some investors have cashed out
early. In hindsight, some have expressed regrets. But “in our case, we are
early-stage people, and we had had a remarkable run,” said one early investor
who sold millions of dollars of stock in 2011, when a Russian investment firm
was buying.
But some investors held on. “For me
personally, this is a once-in-a-decade or once-in-a-career kind of investment,”
said Bijan Sabet, a partner at Boston's Spark Capital, one of the earliest investors in
Twitter.
The New York Times reports: “Mr.
Williams, who provided crucial early financing for Twitter and remains its largest
shareholder, will almost certainly become a billionaire. The venture investor
Chris Sacca and at least two venture capital firms, Union Square Ventures and
Spark Capital, will also most likely end up with stakes exceeding $1 billion
each, according to an analysis of financial documents and interviews with
people who know about Twitter’s finances. Others could make tens of millions or
even hundreds of millions of dollars.”
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