Exclusive: Andreessen Horowitz Invests $80 Million in Twitter

February 9, 2011 at 11:13 am PT

Andreessen Horowitz has invested more than $80 million in Twitter via purchasing stock in private secondary markets.

When called about it by BoomTown, a spokeswoman at the high-profile Silicon Valley venture firm confirmed the purchase.

To be clear, Twitter does not get this money–early investors and employees able to sell their privately held Twitter shares do.

Buying into the secondary markets–which have recently attracted some controversy and regulatory scruntiny–has become a common way for VCs to invest in a hot start-up without a complex and competitive funding bake-off.

The move is an interesting one, since Andreessen Horowitz was not part of the recent $200 million round of venture funding at the San Francisco microblogging company, led by Kleiner Perkins at a $3.75 billion valuation.

Sources said that the firm made the move because it is already deeply invested in other key companies in the social space, including gaming giant Zynga, location-focused Foursquare, local discounting phenom Groupon and general social networking behemoth Facebook.

Apparently, Twitter makes it a full basketball team.

The investment by the firm gives more perceptual boost to Twitter, which is still trying to create a lucrative business model for itself, focused on advertising.

It needs to, if it want to stay independent for the long haul.

While an IPO is a possibility, so is an acquisition. Several months ago, while it was doing its funding round, Twitter had incoming interest from Facebook, which lobbed in a $5 billion soft offer, as well from Google.

Tagged with: acquisition, advertising, Andreessen Horowitz, bake-off, basketball, BoomTown, business model, controversy, digital, discounting, Facebook, financial, firm, Foursquare, funding, gaming, Google, Groupon, independent, Internet, investment, Kara Swisher, Kleiner Perkins, local, location, markets, microblogging, money, offer, private, purchase, regulatory, round, San Francisco, secondary, shares, Silicon Valley, social networking, Start-up, stock, Twitter, valuation, VC, venture, Zynga

comments so far. Add yours.

Anonymous

…”lets invest $80 million for a 2% stake in a company that generates no revenue”…Then: “Lets wait until an IPO and get rid of that share before people realize its worth less then nothing”

Brilliant investment strategy guys…

Although I certainly hope you wont see that money back when the social bubble bursts…will probably teach you a good lesson on investing in actual tech and infrastructure rather then what you kids think is hype and cool these days
Anonymous

Wow, this makes a lot of sense.

http://www.net-privacy.at.tc
Anonymous

“To be clear, Twitter does not get this money–early investors and employees able to sell their privately held Twitter shares do.”

So to say “Andreessen Horowitz has invested more than $80 million in Twitter” is pretty facile … they invested in Twitter *stock*. Hopefully the SEC will level this playing field in the near future. Being public used to be like being pregnant, a pretty binary concept but where there’s money there’s a way.