Betaworks Gets Another $20 Million for Twitter-Friendly Start-Ups. Building a Mountain or Digging a Hole?
Want to invest in Twitter but don’t have the money to play in $100 million funding rounds?
Try Betaworks instead. That’s my translation of the holding company’s pitch, which seems to be effective. Yesterday, it announced that it had raised another $20 million in funding led by RRE Ventures and Intel (INTC); other new investors include AOL (AOL) and the New York Times (NYT).
Betaworks previously raised about $8 million from the likes of the Pilot Group, Ron Conway, Huffington Post co-founder Ken Lerer and AOL CEO Tim Armstrong, who bought in when he was still selling ads for Google (GOOG).
Betaworks is essentially a bet on “real time” companies in general and Twitter specifically. The New York-based outfit has invested in or built a couple dozen companies, almost all of which have something to do with social media. And many of them have direct links to Twitter.
The biggest Betaworks hit to date is an investment in Twitter itself: The company helped fund Summize, a real-time search engine Twitter bought in July 2008, back when the microblogging service was valued at a mere $100 million. Betaworks took its payment in Twitter equity, and that decision has worked out very nicely so far.
Other prominent Betaworks projects are Twitter plays as well. Twitter uses Bit.ly, the URL shortener Betaworks built and then spun off. And Betaworks funded TweetDeck, the most popular Twitter client, which also uses Bit.ly as its default URL shortener.
The risk, of course, is that there isn’t enough there there to support all these companies, which are very much in the Web 2.0 “users first, revenue later” model. As CEO John Borthwick puts it: “We’re either building a mountain or digging a hole.”
But Borthwick has an excellent pitch–the accent helps–which I got to hear when I dropped by his office yesterday. Co-founder Andy Weissman, alas, was AWOL. But if you want to hear his take, he maintains an excellent Tumblr (another Betaworks investment).