SAN FRANCISCO (Reuters) - Twitter nabbed $100 million in funding and a $1 billion valuation on Friday from five firms including mutual fund giant T. Rowe Price, as investors bet that the Web sensation’s explosive growth will yield actual revenue or a lucrative deal.
Investors including private equity firm Insight Venture Partners took part in the latest round of funding, underscoring growing interest in the three-year-old Internet microblogging phenomenon despite its lack of revenue.
Twitter announced it had closed a “significant” round of funding on the company’s official blog. According to a person familiar with the matter, the investors contributed $100 million in new funding, granting the company a $1 billion valuation.
Twitter, which lets people send short, 140-character text messages to groups of “followers,” is one of the fastest-growing Internet social media companies. Worldwide visitors to its site hit 44.5 million in June, up 15-fold from a year earlier, according to comScore.
But Twitter has yet to figure out how to make money from the free service. Executives have cited premium features and advertising as key initiatives to make money, though co-founder Biz Stone told Reuters this week that Twitter would not take advertising this year, despite widespread speculation that it would.
“It is important to us that we find investment partners who share our vision for building a company of enduring value,” wrote Twitter CEO Evan Williams on the blog, noting Twitter closed the round “a few hours ago.”
The $100 million funding and the list of investors were first reported in Thursday’s Wall Street Journal.
The participation of T. Rowe Price, a mutual fund known more for investments in public companies than in start-ups, stirred speculation that Twitter could be moving toward an eventual public offering or acquisition.
Some analysts believe Twitter could eventually be acquired by one of the established Internet companies such as Google Inc, Yahoo Inc or Time Warner Inc’s AOL. Earlier this year, Google CEO Eric Schmidt called Twitter a “poor man’s email.”
San Francisco-based Twitter said the latest funding round included T. Rowe Price and Insight Venture Partners, as well as existing backers Institutional Venture Partners, Spark Capital and Benchmark Capital.
The company has previously said that it intends to remain independent. Past investors, according to ThomsonReuters data, included Benchmark Capital, Union Square Ventures, Charles River Ventures and Bezos Expeditions, which manages the personal investments of Amazon.com chief Jeff Bezos.
A February round of funding, led by Institutional Venture Partners and Benchmark Capital, had valued Twitter at about $250 million. The pair jointly invested $35 million in Twitter during that round.
A Twitter representative was not immediately available for comment.
Reporting by Alexei Oreskovic; Editing by Andre Grenon, Richard Chang and Matthew Lewis