Andreessen injects $80 million in Twitter

Venture capital firm Andreessen Horowitz gets a piece of the microblogging site via secondary market

Financial trends and news by Ronny Kerr
February 9, 2011
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Major Silicon Valley venture capital group Andreessen Horowitz has invested over $80 million in Twitter by purchasing stock in private secondary markets, a spokesperson at the firm has confirmed.
The spokesperson would not disclose any further details, like whether the money came from Andreessen’s $650 million fund, which just closed in November.
Twitter doesn’t get any of the cash, but that’s not problem for the company since it just raised a $200 million round led by Kleiner Perkins Caufield & Byers less than a couple months ago. That round closed valuing the microblogging company at $3.7 billion, but there’s no telling what valuation Andreessen traded shares at.
Services like SecondMarket allow people to trade alternative investments, like bankruptcy claims, whole loans and, the most popular for tech investors lately, private company stock. Facebook was the big star on SecondMarket most recently, flaunting a secondary market valuation that ballooned from $30 million to $50 million in less than a month, thanks to investments from firms as prominent as Accel Partners.

Anything but shabby, Andreessen’s portfolio includes most of the most famous tech darlings, including Facebook, Foursquare, Zynga and Skype. Most recently, the firm contributed to Groupon’s monstrous $950 million round. With Twitter just added to the heap, it’s almost scary to see the kinds of returns Andreessen could see over the next couple years. Except for Foursquare, opinion seems to be in agreement that many of these companies could easily IPO this year or the next.

If anything, Twitter is the odd man out. Though the social blogging site is so often cited in the same sentence as Facebook, there’s a big difference between the two: revenue. Though Twitter’s advertising revenue could triple to $150 million in 2011, according to eMarketer, Facebook could see as much as $4 billion. And those are only estimates. Twitter just started toying with revenue models last year, via its Promoted Products suite, and we have still yet to hear solid numbers affirming their success.

In spite of how popular Twitter may seem today, Andreessen is still doing what VC firms do best: taking a risk.

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