Report: VC infusion values Twitter at $250 million

TechCrunch is reporting Saturday night that Twitter may have signed a term sheet with one or more venture capital firms that would value the microblogging company at $250 million.

Although it did not provide specifics, the report cited “a source with knowledge of the deal.”

Last fall, Facebook was said to have made an offer to buy Twitter worth as much as $500 million.

“Rumor is Twitter hit up more than a few venture firms to pitch the $250 million valuation, and got more than one ‘no,'” TechCrunch wrote Saturday. “But someone’s bit, perhaps encouraged by Twitter’s breakneck growth and the interest from Facebook. That means Twitter gets a new cash injection and time to figure out its business model at an even more leisurely pace.”

That certainly would be a boon for Twitter, which until now has not shown signs of a viable business model. Though it is growing rapidly and has millions of users, no one knows how the company could support itself. Some have worried that while it is increasingly useful to the many people who rely on it, it might not be financially viable over time.

If the TechCrunch report is accurate, however, it would be a signal that Twitter has managed to show investors enough of a structure of a business model to loosen up the cash it needs to get over that hump. Given today’s general economic crisis, that would be a notable accomplishment.

source: cnet news

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