Twitter looks to expand after scooping $200m funding

Twitter has raised $200 million in a deal it hopes can pave the way for massive expansion.

The funding, from Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers and other current Twitter investors, underscores the high hopes that investors have for online social media.

Twitter, which has about 175 million users, started serious efforts to make money less than a year ago. It is valued at $3.7 billion in the deal, while Facebook, the world's leading social networking company, is valued at more than $45 billion in comparison.

Investors are watching services such as Facebook and Twitter closely, hoping one day to buy public shares.

BGC analyst Colin Gillis said Twitter's new valuation could push an IPO further down the road, as Twitter would need to "grow into the valuation" and generate more revenue to justify it to public market investors.

"The idea is that (Twitter's) scale can be monetised," said BGC Partners analyst Colin Gillis, who estimated that Twitter's annual revenue was under $100 million.

But Caris & Co analyst Sandeep Aggarwal said he believed Twitter could be an IPO candidate as soon as next year, particularly as the company could need more funding to capitalize on new opportunities.

"These companies are hungry for resources," said Aggarwal.

Twitter also announced that it had added two new board members — FlipBoard chief executive Mike McCue and DoubleClick chief executive David Rosenblatt.

The moves come two months after the four-year-old company handed the job of chief executive to Dick Costolo, the architect of its new advertising efforts, a sign that making money is a priority for the service.

Costolo said in May that Twitter planned to have hundreds of advertisers using its ad system by the end of the year.

Twitter raised $160 million in four earlier funding rounds, from investors that included Spark Capital, Institutional Venture Partners and mutual fund company T Rowe Price.

Technology blog AllThingsDigital first reported the $200 million funding round, saying said that Kleiner Perkins beat out Russian investment firm DST Global. A Twitter spokesman confirmed that the figures were accurate.