“Let’s go. Yes, let’s go.” [They do not move.]

– Samuel Beckett, “Waiting for Godot”

In Internet terms, the removal of Yahoo CEO Carol Bartz happened a dog’s age ago.

In fact, it was September 6.

Since then, it has felt like a slow slog, especially contrasting the situation with that of another troubled Silicon Valley giant, Hewlett-Packard, which fired its CEO Léo Apotheker and appointed a new one, Meg Whitman on September 22.

Since then, in comparison, the former eBay CEO has been like the Energizer Bunny, making a series of major and often difficult decisions, including: Holding onto its PC unit; reaffirming its controversial deal to buy Autonomy; promising a decision on the fate of its webOS unit within the next two weeks; appointing new execs; and even buying a company.

To be fair, Yahoo did acquire advertising start-up Interclick.

Otherwise, still no sale or investment deal. No new CEO. No Asia resolution. And, perhaps most importantly, no clearly articulated strategy going forward.

It’s not that Yahoo’s leadership isn’t working at it.

Some fervently insist to me that there is a “plan,” as if there is some clever game of Internet Stratego going on that I cannot possibly grok.

Mebbe — but of this I have no doubt: The Yahoo board has indeed been huffing and puffing away, weighing and measuring, considering and debating.

A lot.

Maybe I’m just too impatient. I am (ask my kids).

Or maybe Yahoo’s beleaguered employees are, one of whom just wrote me plaintively, “unreal how they can drag this out,” in what has become a common refrain up and down the ranks.

Or maybe it’s the Asian partners, Alibaba Group and SoftBank, who are antsy and have considered a variety of nuclear options in order to get back stakes Yahoo holds in them. Said one: “The strategy seems to be to frustrate and exhaust us into submission.”

Or, finally, maybe it’s the newly frustrated recent bidders for a partial stake in Yahoo, Silver Lake and TPG Capital. Declared one to me after I warned that Yahoo might, in fact, drag the proceedings out longer than you might expect: “I thought you were kidding.”

Nope, welcome to the Yahoo waiting game, PE guys!

So, to help us all get through it, here’s a quick update primer on what’s what on the various fronts:

Who’s in Charge Here?

Technically, it is the Yahoo board, which is aided by interim CEO Tim Morse.

First, a word about Morse: By all accounts, he is doing a very good job as temporary head honcho — calming the troubled company, making swift decisions about daily operating issues and being a generally nice dude to deal with.

“He’s Yahoo’s no-drama Obama, in comparison to what was happening before,” said one exec, in reference to the more volatile regime under Bartz.

Still, despite his very pleasant all-hands meetings, such as one earlier this week, Morse had previously been Yahoo’s CFO and not an Internet-savvy visionary to give the company inspiration. No insult intended, but he’s the accountant guy.

To be fair, he is not meant to be the visionary, but many at the company are yearning for exactly that.

A role that is now being taken up again by co-founder, former CEO and director Jerry Yang, who dozens of employees tell me is unusually involved in operational details these days for a board member.

I get reports of sightings of him all the livelong day: Jerry in demand-side advertising confab! Jerry chitchatting with entrepreneurs from a possible start-up acquisition! Jerry weighing in on a variety of products. Look, over in the cubicle, it’s Jerry!

This is seen by Yahoo employees as a good thing and also a bad thing, since it’s hard to be running your little divisional show at Yahoo with the dude who invented it all looking over your shoulder, even if he means well. People naturally defer to Yang, the 800-pound Web icon in the room.

But, given the overwhelming state of stasis at Yahoo now — “No one can do anything until we find out how the story ends,” said one staffer — and employees eying the exits, no power at Yahoo really matters but the board.

You know, the board that has gotten the company to this moment of crisis and profound ennui, which is its own particularly ironic irony.

To better understand the power dynamics on the board, above is a little chart for you to peruse to give you an idea of which independent board member is running what key committee.

The only truly important one is the Transactions and Strategic Planning committee, which is headed by Intuit President and CEO Brad Smith and includes former Akamai President (and former Yahoo CEO candidate) David Kenny, top HP exec Vyomesh Joshi and other guy Gary Wilson.

And, in completely visible shadow form, Yang. Multiple sources close to the situation said he has been a key force in the strategery around a possible sale or investment.

This has caused not more than a little tension among board members, but everyone seems to like the much described nicest-man-in-the-room, Smith, and hopes his cool head will prevail.

Another important part of the board is the Nominating and Corporate Governance committee run by Patti Hart, who is energetically and simultaneously — if pointlessly — in search of a capable new Yahoo CEO.

Or, as I like to call this mythical person: The Unicorn.

The Deal

As I and many others have previously reported, there are bids on the table for partial investments in Yahoo by two very powerful private equity firms, Silver Lake and TPG Capital.

It’s a PE rumble, with a side of Microsoft financial backing! (I think Silver Lake’s Egon Durban makes a very nice Riff, while Microsoft’s Steve Ballmer is the perfect Officer Krupke.)

My fervent wishes for some figurative and dance-accompanied knife-play aside, the bids are essentially the same in general and different in particular. Silver Lake is offering about $16.50 a share, while TPG is dangling a tiny bit more. Silver Lake has power entrepreneur and VC Marc Andreessen on its side, while TPG is trying to get Silicon Valley fave investor and start-up whisperer Reid Hoffman of Greylock Partners and LinkedIn on its team. Both have ideas on CEOs, strategy and what to do about the Asian assets.

This type of deal could happen suddenly and you’ll hear about it quick, since the losing side will immediately trash it to the media.

As you might expect, each director has their favorite PE firm, with some not liking Andreessen, some thinking the TPG bid is a little light, some for a whole-company deal and some wanting Yahoo to hire its own CEO and run the place itself.

Of course, the last one shows a disturbing level of denial and should be a nonstarter, given the board’s abysmal record on CEO choice and its riding of Yahoo to this sad point in its storied history.

Here’s what to expect on the PE front: A lot of wrangling behind the scenes with frequent leaks to the media about what each side wants and will not yield on.

CEO choice or no CEO choice, that is the question!

Also a big factor are Yahoo’s major shareholders, few of whom like the partial investment deal, which is known as a PIPE (Private Investment in Public Equity), because of the insiderness of it all and because they prefer a whole-company sale at a higher price.

There is also pressure from activist shareholders like Daniel Loeb of Third Point, who has attacked Yang and others on the board and is ready to pounce with a proxy fight if Yahoo tries to override shareholders too egregiously. And, of course, the inevitable lawsuits over any arrangement that seems to block a whole-company bid.

That said, such a mega-deal seems unlikely, since it is too pricey and despite a lot of noise that Yahoo’s Asian partners were ready to strike with a takeover in order to get back Yahoo’s big stakes in their companies.

That’s kind of like buying a store to get back the cool pair of shoes you sold, but bankers love to scheme up this stuff. While it certainly could happen, it would be a bear of a deal.

Perhaps more like Yogi Bear, hopelessly angling for a tasty pic-a-nik basket — but grrrr anyway.

But perhaps the biggest factor in all of this mishegas is time. There is none on a lot of levels, most especially the increasing level of brain drain and drift at Yahoo. After the New Year dawns, this is going to spin right out of control and amount to the biggest internal challenge Yahoo faces.

An Asian Solution

As I and others have reported, Yahoo is entertaining yet another proposal to sell all or part of its Asian assets back to the companies, which make up a bulk of its market valuation.

The relationship between Yahoo and its Asian partners has long been fraught, and today the difficulty of reaching an agreement remains a vexing issue. That’s because it is hard and complex and because no one wants to do what the other side wants.

I am no tax attorney, but it seems as if Yahoo will ultimately come to some deal with China’s Alibaba and Japan’s SoftBank, which could include big investors like Russia’s DST Global.

And, as I reported last week, the Asian partners want to strike a deal with the current board rather than lose leverage with a much cannier new owner.

It’s a tough decision in all aspects to strike, but would remove the focus on the fact that Yahoo’s most valuable asset is something it is not running and simply holds due to a good stock trade in years past.

Years past should be the operative thought here, since the Asian assets have nothing to do with what Yahoo needs to do with its core U.S. and global brand.

You know, the thing that allowed them to buy those lucrative Asian assets in the first place?

Strategery

And that’s the crux of all this, isn’t it? Yahoo needs a new strategy and fast.

Or it needs to clarify and hone its current strategies around advertising and media and define itself once and for all. While it often touts itself as a premier digital media company, it’s still not clear exactly what Yahoo is saying by that.

In fact, incredibly, sources told me that the board was still wrangling over the tired issue of what Yahoo is at its most recent meeting — essentially, is it a products company or a media company?

If I had to listen to that who-am-I-anyway debate again, I think I would scream, given how many important Web trends that Yahoo has whiffed in recent years, many of which were right in its own wheelhouse.

How much damage this has caused to Yahoo’s core business is a critical one to determine, with many feeling the situation is too far gone to revive it and others confident that this is simply an issue of poor execution.

I am in the middle on this one, but all the indicators of Yahoo’s business have long been heading in the wrong direction, and results in the next quarter are expected to underline this even more.

Thus, the board’s navel-gazing at this point is untoward, considering that it is presiding over the possibility of a sale that should not have had to happen in the first place. While it is not quite a fire sale, it’s no cause for celebration at all the attention, either.

In fact, it’s also pointless, since — if this all resolves as it should — the current Yahoo board will not be the one determining the company’s future any longer. Remember that: This group should and will be gone for the most part.

Yahoo shareholders and employees can hope, at least.

Then, it will be up to the next group of leaders to make the very hard choices — including what are likely to be massive layoffs and radical surgery on its offerings — for what’s to come next.

In the end, that is all that will matter. Until then, as usual, you’ll have to sit tight.

Silicon Valley venture firm Andreessen Horowitz said today that it was joining well-known investors Ron Conway and DST Global’s Yuri Milner in the Y Combinator Start Fund, which gives $150,000 to each start-up in its semi-annual group.

Andreessen Horowitz will be investing $50,000 of the total in each entrepreneurial effort, starting with the next “class” of up to five dozen companies later this month in the well-regarded incubator.

The money comes in the form of convertible debt, which is a loan that can convert if a start-up raises a funding round. Start-ups can refuse the money, although most do not.

“I can’t tell you how impressed we have been with the quality of the start-ups that Y Combinator has had,” said Marc Andreessen in an interview with me this afternoon. “[Co-founders Paul Graham and Jessica Livingston] have become the consigliere to a whole new generation of entrepreneurs.”

Indeed. Y Combinator assembles these start-ups twice a year, giving them about $15,000 to work on their idea, but — more importantly — providing a lot of support and entree to powerful investors in Silicon Valley. Its efforts have been critical to the beginnings of many successful companies, such as Reddit, Loopt and Scribd.

“So many of the high quality seed deals have been coming from Y Combinator and we wanted to be close to all those companies,” said Andreessen. “It’s a great view of what’s coming next from the very best start-ups.”

Is this investment-banker-hype week and nobody told me?

It certainly seems so from all the almost ridonkulous rumors about everyone and their mother being “imminently poised” to make a bid for Yahoo.

In fact, the process is only beginning to chug along with the Yahoo board, aided by Allen & Company and now Goldman Sachs.

At this point, it is lots of folks rubbernecking, books being prepared and all the other stuff bankers do to look like they are busy, busy, busy.

Among the most serious players: Silver Lake and a shifting group; and a consortium that includes former News Corp. exec Peter Chernin and Providence Equity Partners.

And, just slightly, News Corp. (which owns this Web site) is considering dipping a very small toe in as part of a larger group.

That has been copiously reported here and elsewhere a badillion times already.

But — and I have been clear on this, as have others — no one is near anything of substance, which has not stopped this really lame game of Clue being pumped up by bankers who should know better.

Yesterday, it was Silver Lake, DST Global and the Alibaba Group in the billiard room with foreign money. Nope, nope, nope. Silver Lake and DST are indeed looking hard and Alibaba is a player here, but there is no grand troika going at this moment.

In fact, Alibaba’s Jack Ma — after declaring he was “very interested” in buying Yahoo — has since backed off.

And today, it’s a thinly sourced and carefully worded report of Microsoft in the basement, interested in bidding with a pile of their own dough.

How can I put this delicately? How about: No.

According to my sources, throughout this entire process Microsoft execs have taken pains to make it clear that they are not going to be among the bidders in any significant manner.

In addition, the company has also been communicating with bidders that — while Microsoft is interested in a stable Yahoo, given their search and advertising partnership — it would not throw in with anyone in the process yet.

And, finally, if a winner eventually emerges, it might — and this is only might — consider making a token investment to help get the deal completed.

Certainly, Microsoft has been and is willing to talk to anyone interested, said sources, given their Yahoo business relationship. But this does not make it a bid of any shape or size. They are not even “considering” it, unless that means watching from a distance.

I suppose in some incredible shift Microsoft could change its mind, but most credible sources I spoke to said that is not happening now.

In fact, after its bruising and failed takeover attempt of Yahoo several years ago, said multiple sources, Microsoft now has the deal it wants with Yahoo.

“Why buy the cow when you can get the search and advertising deal for free,” joked one person close to the situation.

After his unusually enthusiastic declaration at a Silicon Valley event last week that “we are very, very interested” in buying the “whole” of Yahoo, you might imagine Alibaba Group co-founder and CEO Jack Ma running out of the speech looking for a giant pile of cash to pay for it immediately.

Instead, according to sources close to the situation, what the Chinese entrepreneur got was a cold dose of CFIUS — or Committee on Foreign Investment in the United States, the federal interagency review process for foreign investment deals.

Translation: If you are from China and want to buy our U.S. companies, we are going to have to give you a major look-see and it is not going to be pretty.

Perhaps that’s fair, but the prospect that even a purchase such as Yahoo, a consumer business that seems to have little in the way of national security concerns, might enter the buzzsaw of U.S. politics apparently surprised Ma.

Thus, sources said, that while it remains very interested, Alibaba is now at least a little concerned about the feasibility of the deal and that Ma is “perplexed” about why the U.S. has such restrictive rules against foreign ownership of a consumer business.

That said, he has been in touch with Yahoo co-founder and board member Jerry Yang and is likely to make a more official visit soon with others involved in Yahoo’s strategic review.

In addition, sources said, rumors of an imminent Yahoo bid hook-up with DST Global and Silver Lake — which recently invested in Alibaba — are overblown. While Ma did say last week at his much-noticed speech at Stanford University that he was talking to a lot of buyers, Alibaba is not closely aligned with anyone as yet.

Of course, given that Yahoo owns a 40 percent stake in Alibaba, Ma will be a big player in any deal done.

That’s because of a 2005 agreement that stipulates that if there is a change of control, Yahoo must give Alibaba a 15-day chance to buy back its stake.

Still, after his effusive I-want-Yahoo-now speech that caught the Internet giant and its bidders off guard, dialing back the rhetoric a bit is probably no surprise given the delicate dancing now going on.

In other words, a case of wanna-be-buyer’s remorse.

While they are usually much less voluble than the chatty Web execs of Silicon Valley, the execs who run China’s fast-growing Internet companies seem to be keeping up just fine of late.

On Friday, for example, the Alibaba Group’s Jack Ma was positively effusive about wanting to buy all of Yahoo, a company which actually owns 40 percent of Alibaba. “We are very, very interested,” said Ma at an event at Stanford University.

Now, in an interview with Bloomberg, Renren CEO Joe Chen decided to take a smack at Ma over his disputed spinoff of its Alipay payments unit, which caused a high-profile ruckus with Yahoo earlier this year.

“It’s quite unfortunate,” Chen said to Bloomberg about disagreement, which has since been settled. “It caused a lot of uncertainty about Chinese Internet companies.”

Them’s fightin’ words, and a source close to Alibaba reacted with, well, reaction.

“Yeah, it shook confidence so badly that Silver Lake and DST [Global] just decided to put in billions to back Jack Ma,” referring to a recent funding deal by the large investors. “People shouldn’t try to blame their own lack of performance on others.”

Ouch!

Actually, Renren has bigger problems than Alibaba.

According to a substantive report in The Wall Street Journal yesterday, what’s really hurting Chinese Internet companies is the declining stocks caused by recent accounting scandals there, which may have attracted scrutiny from U.S. regulators.

Wrote the Journal: “A series of alleged accounting frauds this year at little-known Chinese companies listed in the U.S. has triggered a sharp shift in sentiment among investors, who are now worried about hidden business risks or financial problems.”

Hence possible investigations by the Securities and Exchange Commission that will surely drag Chinese stocks on U.S. exchanges down more.

And indeed, the stock of Renren — which had its own controversial issue with accurate data reporting at the time of the IPO of the social networking site earlier this year — declined 13 percent Friday, along with other Chinese companies listed here.

Here’s some electric weekend reading for those interested in the push and pull between venture investors and start-ups in the frothy Web 2.0 environment.

In an email to Airbnb CEO and co-founder Brian Chesky (which I obtained, embedded below), former Facebook exec Chamath Palihapitiya, who now runs an investment fund called the Social+Capital Partnership, is passing on participating in the recent $112 million round for the hot online rental site that was announced in July.

The deal — which values the company at $1.2 billion — has not officially closed yet, but includes venture firms such as DST Global, Andreessen Horowitz and others. Previous investors include Sequoia Capital.

Palihapitiya confirmed to me that it was his email and that his possible investment in Airbnb was small.

That said, his concerns center on how much voting control of new investors’ preferred shares the founders have in the latest round and also a $22.5 million cashing out, $21 million of which is going to those founders.

Another $9.6 million is being used to buy secondary stock from current Airbnb shareholders, who have to render parts of their vested stakes for the money.

Such wrangling between investors and entrepreneurs is not uncommon in Silicon Valley these days, as ever-dumber money chases ever-more-powerful geeks. But Palihapitiya’s email is a smart, reasonable and well-written argument to stop the madness.

According to sources close to Airbnb, the numbers that he refers to below are accurate, as is what appears to be an unusual level of voting control by its founders. Presumably, it is to protect the company from possible future sales on the secondary markets and to keep control with its founders as the number of investors grows.

In any case, the Palihapitiya email to Chesky is well worth the read (I have removed email addresses as a courtesy):

From: Chamath Palihapitiya
Date: Sat, 1 Oct 2011 11:16:05 -0700

To: Brian Chesky

Subject: Airbnb financing…

Brian,

Cc Marc, Reid, my deal team

Thanks again for giving me the chance to participate in your latest financing. I had a chance to review the docs at length yesterday and I wanted to follow up as, quite honestly, I’ve never seen a deal like this over ~60 investments I’ve done and I’m pretty concerned.

I’m all for getting the best valuation you can, minimizing dilution and maximizing control. We did this brilliantly at Facebook…all of our financings (except our first $$$ from Peter Thiel) were done not out of necessity but opportunity. As such, our investors had virtually no control and it resulted in a much better outcome. As we’ve discussed, I generally don’t believe investors add much to a success story and so minimizing their impact is a great strategy when you are onto something that is working.

This said, while several of these concepts are reflected in the current deal, there is one big thing that I am fundamentally against and violates my principles and will prevent me from participating in your round. When I saw that you guys were taking $31M out of the company, I didn’t think much of it as I just assumed it would entirely be via a secondary sale.

But as I understand the deal, it seems that you are doing only $9.6M in secondary and $22.5M as a dividend to common (of which $21M goes to you and your co-founders). I am really uncomfortable with this and don’t think its in the spirit of building a good, long term business. Effectively, it is a strategy that allows you guys to take money out of the business and not dilute yourself — I’m not sure why this is such a big deal when you guys are almost 90% vested and the financing is at $1.2B where your dilution is marginal. Further, it excludes many of the employees that probably have helped you and your co–founders get the company to this place as most of these folks probably don’t have any stock but have unexercised stock options and thus won’t get a dividend.

My basic principle on this stuff is that if you want liquidity, that’s fine, but you should make it available to everyone. Otherwise, no one should get it. Your current deal is the farthest away from this principle that I’ve seen in a while…this strategy has been done once before — at Groupon. We can see how “well” they are doing and how short term the investor community is now viewing their motives. I really think you can do better than this…and that you are better than this.

Separately, when you look at successful tech companies, it seems that dividends are an approach used by cash rich operations to distribute excess earnings — in fact, the most successful, cash rich tech company in the world, Apple, hasn’t issued a dividend and they have more than $75B in cash! Again, while I think Airbnb will be a good company, this is nowhere near the truth now — you guys still need to scale and build this thing for the future.

I really think you are onto something but I would implore you to not take the easy way out. Treat your employees the same as you’d treat yourself. Do things that you will be proud of and can defend to anyone including your Board, employees, prospective hires etc. In such a competitive hiring market, you are competing with not just your obvious competitors, but also any successful tech company who is also looking for great talent. A principle that treats your employees as well as you’d treat yourself is a huge strategy for differentiation, retention and long term happiness of the exact types of people you will need to be successful. In contrast, if you are viewed as self-dealing and shady, it will only hurt your long term prospects…

In summary, I’m passing on this financing because I strongly disagree with what’s going on. I’m not sure who advocated this approach but I did mention this to Reid [Hoffman, another Airbnb investor via Greylock Partners] last night and he was of a similar mind to myself and surprised this was the approach being taken. If you want some good advice — I would ask that you consider pinging him about different ways to think about going about the liquidity portion.

If you change your mind on how to close this financing, let me know and I’d love to reconsider. Otherwise, good luck and lets keep in touch.

Take care,

Chamath

Silicon Valley’s Silver Lake and DST Global of Russia, as well as Chinese private equity firm Yunfeng Capital, are leading a $1.6 billion tender offer for privately held employee and shareholder stock of China’s Alibaba Group, according to sources close to the situation.

Yunfeng, by the way, was co-founded by Alibaba Chairman and CEO Jack Ma, as well as other prominent Chinese entrepreneurs.

Along with DST, Silver Lake and Yunfeng, Singapore-based investment firm Temasek is also participating in the tender offer as an investor, but in a smaller way.

The deal, which has been discussed for some time, was signed earlier today and will be presented to its employees in an internal company blog, which will be in Chinese.

To get around persistent foreign ownership issues in China, sources said, DST and Silver Lake are ceding voting control of their stakes to Alibaba management.

If the tender is fully subscribed, that would mean a stake of just under five percent for the group, sources said, and it gives Alibaba a $32 billion enterprise valuation.

The impetus for the tender offer, which begins today, appears to be trying to address a cash-out, paper-rich issue for Alibaba employees.

There are no active secondary private markets in China, as is the case for tech start-ups in the U.S., and there is also no IPO in the foreseeable future for Alibaba. Thus, management has been looking for a way to give its employees and also other shareholders some liquidity.

This tender offer is not a capital raise by Alibaba and is only aimed at eligible employees and shareholders. The purchase of the Alibaba shares is expected to close before the end of December.

It will be done via a special investment vehicle, specifically aimed at this purchase, that includes a spate of investors. Giant Interactive Group, a Chinese online game developer, for example, said it had committed $50 million to the fund.

It’s not clear what the implications are for Alibaba’s biggest shareholder, Yahoo, which sources said is not selling shares in the tender offer. Yahoo’s fully diluted Alibaba 39 percent stake is now worth $12.5 billion in the deal.

That’s discounted due to tax issues and also the inability of the Silicon Valley Internet giant to sell its Alibaba shares.

In other words, investors will likely welcome this higher valuation, but realize a public offering is farther away than ever.

But it is interesting in that it clearly shows a strong relationship between DST and Silver Lake, which have jointly been mulling a possible bid for Yahoo along with Silicon Valley venture firm Andreessen Horowitz, as I previously reported.

Some will speculate that Silver Lake and DST now have an in with Alibaba, which is important, since a large slug of Yahoo’s market valuation is due to its Alibaba and also Yahoo Japan! assets.

If Yahoo is sold, of course, the disposition of the Alibaba asset is an important part of the deal.

More to come, including the implications for Ma, who has been under siege of late around his spinning out of Alibaba’s Alipay payments service and the noisy battle that later ensued with Yahoo. Yahoo and Alibaba, as well as its other large shareholder, Japan’s SoftBank, settled that dispute earlier this summer.

His involvement in Yunfeng, which is buying the company’s shares in a special fund that Ma is not in, will likely attract some scrutiny, anyway.

Sources said Ma is a minority investor in Yunfeng itself, has no control rights and is not a director. In addition, Yunfeng has no relationship with Alibaba.

In another interesting twist, Alibaba rival Tencent has close ties with DST’s Internet affiliate that used to share the same name, having invested $300 million last year in the affiliate that holds major Russian Internet properties.

A range of major players interested in acquiring all or a large piece of Yahoo have been prepping possible bids and have been in touch with the Internet giant’s board over the last several days.

While Yahoo has publicly said it was not for sale, according to numerous sources both inside and outside the company, it has been receptive to the interest and its Chairman Roy Bostock and Co-founder Jerry Yang have spoken to several.

Among the possible players: Silicon Valley venture firm Andreessen Horowitz, which is working with private equity firm Silver Lake, in a deal that also might include Russia’s DST Global and Yahoo’s Japanese partner Masa Son; former News Corp. exec Peter Chernin, who is partnered with Providence Equity Partners; and the possibility that Yahoo’s Chinese partner, Alibaba Group, might consider entering the fray in what could be a reverse merger of sorts.

Also being rung up by some of the parties: Microsoft — Yahoo’s advertising and search partner — which is being seen as a possibly moneybags in any deal.

The movement among these investors is against a backdrop of increasing pressure for Yahoo’s board, after it fired CEO Carol Bartz last week. In the wake of the dramatic move, shareholders have upped criticism of Bostock and the board and have been looking hard for alternatives.

Today, that included hedge fund investor Daniel Loeb of Third Point, which has a 5.1 percent stake in Yahoo. In a filing this morning, he said he might increase that amount, and described a testy hour-long phone call he had earlier this week with Bostock that ended abruptly with a hang-up from Yahoo.

Sources said Loeb called Bostock a “fool,” among other not-so-nice names, on the call and asked for Yang’s help in dumping him.

This comes as exactly no surprise, given his previously strong letter in which Loeb called for Bostock’s ouster.

Loeb has been calling out Bostock — who is also on the boards of Morgan Stanley and Delta Airlines — for a series of gaffes at Yahoo since he became chairman in 2008 (he’s been on the board since 2003).

Those have included: Yahoo’s bungled effort to stave off a takeover by Microsoft several years ago; the too-long enthusiasm for Bartz, who was hired in early 2009 and fired last week; sitting unusually still as competitors such as Facebook, Google and more have out-innovated and outgrown Yahoo; and, of course, the falling knife of a stock, which has dropped precipitously since Bostock has been in charge of the board.

As Loeb wrote in a letter he sent to the company last week:

“It is time that certain members of this Board were held accountable for its past failures and their individual roles. Accordingly, we insist that Mr. Bostock, who championed Ms. Bartz’s hiring and led the charge against the Microsoft deal, promptly resign from the Board.”

Loeb is likely to add to that later today at a high-profile investor conference in New York, where the colorful but tough-talking investor is sure to add more logs to the fire.

But it not only him. Other major shareholders of Yahoo are also in touch with possible outside buyers, seeking a change at the long-troubled company, after its shares have remained in the doldrums, its attrition rate of employees has spiked and its product pipeline has slowed to drip.

This has all been taking place — of course — during one of tech biggest and most innovative booms, in which Yahoo competitors have grown strongly.

Enter Marc Andreessen, the well-known entrepreneur who has transformed himself into one of Silicon Valley’s most powerful venture capitalists.

He and his partner Ben Horowitz recently pulled off another similar deal — with Silver Lake — to take control of a then-troubled Skype. They later flipped it to Microsoft for a large return.

Sources familiar with the situation said the pair have become increasingly intrigued by the situation at Yahoo and believe that its assets and brand are still strong, despite its management turmoil in recent years.

One problem is the huge cost of almost any kind of takeover and also the complexity, given much of Yahoo’s $18.5 billion valuation is due to its Asian assets.

The sale of those shares, as well as the selling off of some of Yahoo’s less core properties, makes for a very complicated situation for anyone.

Said one person looking at the company: “It is one of the more massive hairballs around.”

That is a common sentiment among many of those looking at Yahoo, which has hired Allen & Co. to manage the process.

Also of worry is a bid that would include too many players. Yahoo has long been plagued by indecisiveness on the part of its execs and, mostly, its board.

But one thing all the possible buyers of Yahoo, as well as an increasing number of its shareholders, agree on: The Yahoo board needs a major shake-up.

As Loeb wrote last week, which many I interviewed also echoed:

“This letter details our principled demands for sweeping changes in both the Board of Directors (the “Board”) and Company leadership, and outlines the hidden value of Yahoo, which has been severely damaged — but not irreparably — by poor management and governance.”

Of course I have something to say about the news yesterday that AOL would be a key investor in a new early-stage venture fund being started by TechCrunch’s perpetually petulant editor Michael Arrington — with a big, fat and decidedly greasy assist from a panoply of Silicon Valley’s most powerful VC firms and angel investors.

Arrington has previously called me “chief whiner” — oooh, buuuurn, although fair enough, since I have compared him to an egomaniac turtle named Yertle in the past — about my nagging him over the importance of upholding standards of fairness and ethics in journalism.

So as not to let him down, let me begin the whining.

First, my initial reaction when I first heard about the deal: Ugh. Sigh. Hopelessly corrupt. Now 100 percent more icky! A giant, greedy, Silicon Valley pig pile.

I was upset.

By early evening, after my kids told me to chillax, my dark mood had changed to accept that the transaction — however profoundly distasteful to me — was part and parcel of the insidious log-rolling, back-scratching ecosystem that has happened in every other center of power in the universe since the beginning of time.

And so it goes in Silicon Valley.

In fact, the creation of a $20 million investment kitty that Arrington has dubbed CrunchFund is simply the formalization of a long-standing arrangement that has already been going on since he founded his popular tech blog.

That is to say, in which the basic standards of journalism are first warped by calling it newfangled truth-telling and then endlessly corroded by using a wily and unusually aggressive combination of favors and threats to extract, from start-ups and VCs in need of press, both exclusive access and information.

And now, inevitably, money.

This could have been a lot cleaner, of course, by Arrington simply resigning from TechCrunch, becoming a VC and perhaps starting a new blog where his agenda is much clearer, from which he could huff and puff away as he does with much entertaining gusto at real and (mostly) imagined slights.

There is certainly precedent for VCs blogging, including Fred Wilson, Brad Feld and Ben Horowitz. And, despite my criticisms about ethics, it is clear that Arrington is a talented writer whose unique voice would be even stronger if it was truly seen as separate from what has become a news organization.

But because of his obvious need to be the center of attention — requiring the ermine kingmaker mantle and foisting his patented I’m-here-to-tell-it-like-it-is attitude on us all — that appears to be impossible.

(By the way, I await Arrington’s usual inane rant about the fictional conflicts of interest related to my gay Google marriage anytime now in 3 … 2 … 1, always and purposefully leaving out the pertinent facts that I can only wed one person, get no financial benefit and am also a prominent critic of the scary search behemoth, while he can make a badillion questionable and grossly tangled investments.)

Personal annoyances aside, what’s most interesting here is the group of Silicon Valley power players who lined up to bow and scrape and then hand over a small pile of dough to the blogger who would be king.

They include: Sequoia Capital, Redpoint Ventures, Kleiner Perkins, Greylock Partners, Austin Ventures and Accel Partners, as well as individual investments from partners at Benchmark Capital and Andreessen Horowitz, entrepreneur Kevin Rose and DST Global’s Yuri Milner. And, of course, the inevitable Arrington BFF Ron Conway.

Holy googa mooga, that would be, well, everyone, except Ashton Kutcher and Justin Timberlake (who will surely appear soon enough).

As one person also pointed out to me, I don’t recall this many competing VCs investing in one company, let alone another venture fund.

It goes without saying that the reasons they all decided to jump in this fetid pool with abandon are quite varied, if all entirely compromised.

One investor told me — off the record, naturally — that he thought it would be an interesting experiment to see what happened and so he wanted in, especially since everyone else was doing it.

Another well-known VC said that there is no downside to being financially affiliated, especially in attracting talent to its start-ups, with Arrington and, by extension, TechCrunch.

The well-respected Reid Hoffman of Greylock was the only one brave enough to talk on the record, explaining the reasoning pretty clearly:

“Techcrunch will get some real deal flow from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed. As many tech entrepreneurs read it — both within Silicon Valley and globally — and view the information news feed to be their target for announcing themselves to the world, Crunchfund will have access to deal flow to these diverse and early stage companies. Some of these companies will be the kind of early stage companies with billion-dollar potential that Greylock invests in.”

There you have it: No one can afford to be out of the deal flow in these times, even if it means cutting corners.

While TechCrunch’s owner, AOL, said Arrington will no longer be managing editor, with only writing duties at the site he dominates and with no editorial control, Hoffman’s use of TechCrunch for CrunchFund was accurate, because in the eyes of many they are interchangeable.

That’s due to the fact that Arrington still breaks or is clearly the source for important stories on the site and, more importantly, is the big swinging dude who attracts all the eager entrepreneurs to the party. He is the fulcrum of that site, even as it has grown.

And so it will remain, I am guessing, no matter how much AOL insists it will not be so, because the easy questions pile up quickly:

Will Arrington keep doing what are clearly news stories, for example, even though he protesteth too much — as he did in the New York Times yesterday — that he is not a journalist?

And, if so, is it right for him to do so given his insider status, creating a nonparity of sourcing and crystal clear conflicts of interest?

Most of all, can he resist his palpable love of news-breaking and scoops, even if he gets them in ever more unseemly ways?

As if to make it all pretty, Arrington told reporters yesterday that he has put a clause in his limited partnership agreement so he can report on anything he likes, and in any way, about his investors and their companies, however confidential, except those he invests in.

O joyous day! Freedom of the press is preserved and our sacred First Amendment can breathe a sigh of relief, now that it is enshrined in an unholy blogger-VC LP agreement.

After pausing for a moment so that Thomas Jefferson and Edward R. Murrow can stop spinning in their graves, you can go down this road for many increasingly bumpy miles, which only becomes more twisted and confusing as it continues.

I finally talked to one investor in CrunchFund, who said simply and honestly: “It’s not that much money, so who cares?”

Indeed, who does care anymore about crossing what had long been very bright lines in journalism and, if you want to get all cosmic, in life?

Obviously, most of all, not AOL, or its CEO Tim Armstrong, or its head of content, Arianna Huffington. The pair, for whatever reason, decided to make a startling exception for Arrington from a rule that explicitly bars reporters at its media units from investing in the companies they cover.

That happened after he recently did a complete 180 from a previous decision to stop investing and jumped right back in, leaving Armstrong and Huffington to clean up the ethical mess.

They only made it worse, with their decision to throw journalism under the bus by letting Arrington do as he pleased, while touting how important it was for other content sites at AOL to remain more pure.

In the spirit of full disclosure, these kinds of ethical lapses are endemic these days in journalism. Case in point: The appalling phone-hacking controversy taking place at News Corp.’s News International unit in Britain.

While I cannot speak for Dow Jones, I can say that the behavior in another News Corp. property certainly takes its toll on those who adhere to higher standards at the company, especially when it comes to morale.

Thus, I can imagine how others feel at AOL — including those you-know-who-you-are silent ones at TechCrunch — who can’t and, more to the point, wouldn’t make the deals Arrington has been allowed to get away with.

It is not a good feeling, I can assure you.

And, while I have not spoken to her about it, I’d imagine that Huffington cannot be thrilled to be pushing for better journalism at AOL and trying to burnish her cred by hiring some top reporters, while also having to deal with this.

That’s okay, because Armstrong was perfectly willing to do the awkward pretzel-twist needed to explain away the controversial situation, also in an interview with the Times:

“TechCrunch is a different property and they have different standards. We have a traditional understanding of journalism with the exception of TechCrunch, which is different but is transparent about it.”

In this case, Tim, I am sorry to inform you that transparency is a complete canard and is more likely to end up covering up a lot more transgressions than it ever will reveal.

And, essentially and lazily sloughing it off by saying, “That’s just Mike being Mike,” is not going to cut it, at least not with me.

Not that any amount of tsk-tsking about it matters, I suppose, as Arrington finally gets his fervent Pinocchio-on-a-star wish to be a real-boy VC, can add yet another tainted buck to the pile of billions his venture pals already have, and just call it another typical day in Silicon Valley.

Still, when you are the designated whiner-in-chief, it is pretty much all one can do.

Whether or not to sell any of their shares in Twitter is the big decision facing stakeholders of the microblogging service right now, as the second $400 million part of the company’s recent funding by Russia’s DST Global is completed in the next several weeks.

That includes everyone from early angel investors to those who bought it on the secondary markets to Twitter’s 600 employees, all of whom can sell a portion — up to 20 percent, sources said — of their holdings.

It’s all part of a recent $800 million mega-funding by Twitter, valuing the San Francisco company at $8.4 billion.

While $400 million went to Twitter, the second tranche of $400 million of the total was targeted to cash out current investors and also employees of the company.

Current investors include Benchmark Capital, Union Square Ventures, Spark Capital and several other venture firms, as well as a spate of prominent angel investors, such as Ron Conway.

Whether DST — as well as other smaller buyers, including early Twitter investor Chris Sacca and T. Rowe Price, according to the tender offer — gets them and others to sell enough shares is the big question, especially since few want to get caught in what one shareholder called the “Facebook idiot box.”

That would be referring to those who sold their investments in Facebook two years ago, when the social networking giant allowed its employees to sell 20 percent of their stakes to DST.

The financing was part of a $100 million add-on to a $200 million investment in the social networking company by the aggressive Russian investor.

At the time, the tender offer valued Facebook at $6.5 billion for the common stock, or $14.77 a share.

Of course, Facebook is worth upward of more than 10 times that now. Oops!

That’s why high-profile Silicon Valley venture firm Andreessen Horowitz, for example, is not selling out any of the shares it bought earlier this year in an $80 million transaction in private secondary markets.

Reasons to sell, of course, are also compelling.

Some investors might want to lock in upside, especially if they think the latest valuation is too high.

For venture capitalists in the company, some might want to return a win to their limited partners, while Twitter employees might want to put a down payment on a house after years of toiling in the start-up.

Others might also be worried about Twitter’s prospects going forward and might determine that the recent round was the high point of its market value. Twitter has indeed struggled to find a sustainable and lucrative business model, focused on advertising.

In addition, although it has recently stabilized, others might worry about Twitter’s management changes over the last year, as co-founders Biz Stone and Evan Williams have departed. Twitter creator and other co-founder Jack Dorsey is now running the company’s product efforts, with CEO Dick Costolo (who looks a lot like that Woody Allen shot above from the classic movie, “Take the Money and Run”).

Then again, that was exactly the take on Facebook several years ago, so it is now a case on all sides of seller beware.

Twitter declined to comment and I have not heard back yet from DST about the status of the transaction.

Without giving any financial details, low down in a blog post this morning, Twitter confirmed it had gotten “significant” new venture funding from DST Global of Russia, as well as from existing investors.

As AllThingsD previously reported, DST will be the biggest player in a total round of $800 million for the San Francisco microblogging site, with $400 million going to cash out employees and other shareholders. The new funding will value Twitter at $8.4 billion.

In a quote, DST’s Yuri Milner said:

“Twitter is one of the few companies that has truly changed the world. Twitter’s astonishing growth is a testament to how important it is becoming to more people every day, and why we couldn’t pass up the chance to be a bigger part of its future.”

DST has funded all the prominent Web 2.0 companies, from Facebook to Zynga to Groupon, so now it is apparently Twitter’s turn.

Here’s the full blog post from Twitter:

Your World, More Connected

Twitter continues to grow around the globe at a record pace. Just a year ago, we delivered 65 million Tweets a day. Today, we generate over 200 million Tweets per day. One year ago, there were approximately 150,000 registered Twitter apps. Now, there are more than one million that connect to Twitter. And our team has grown from 250 people to more than 600 in the past 12 months.

More importantly, Twitter is where people around the globe come to instantly connect to what’s most meaningful to them. This makes Twitter the only place in the world to get a real-time pulse on what people are thinking and doing practically anywhere.

We’ve come very far in a short time. Now we have an opportunity to expand Twitter’s reach with a significant round of funding led by the venture firm DST Global, with the participation of several of our existing investors. We will use these resources to aggressively innovate, hire more great people and invest in international expansion.

Thank you for everything you’ve done to help get us here and for inspiring us to work even harder. We can’t wait for you to see what we have planned to make Twitter even better.

The San Francisco-based company has received $112 million in a second round of funding from well-known Silicon Valley investor Andreessen Horowitz. Other investors participating include DST Global and General Catalyst.

Andreessen Horowitz contributed about half of the round. Jeff Jordan, one of the newest general partners at the firm (and who recently left OpenTable), wrote about the investment in a blog post.

TechCrunch previously reported that the company was seeking more than $100 million at a $1 billion-plus valuation.

The second round of funding for the company is astonishing, given that its first round totaled $7.8 million.

The company said the capital will be used to generate new growth and hire additional employees.

The vacation rental start-up was recently featured in a WSJ story as having some of the most enticing job perks, such as wine and cheese mixers, rooftop barbecues and an air-guitar contest.

Airbnb has experienced extremely strong growth over the past year, and now has booked more than two million nights. It also receives more than 30 million page views per month.

The company expects to grow internationally, including in markets such as Germany, the U.K., France and Brazil, where it is already seeing some traffic.

Earlier this month, HomeAway, which owns several vacation home rental property sites around the world, raised $231 million in stock from its IPO.

In a move reminiscent of one done by Facebook in 2009, Twitter is close to completing an $800 million funding deal that will include a second part in which around $400 million of the total will be used to cash out current investors and also employees.

According to several sources close to the situation, the complex transaction could be completed within two weeks.

Along with basic funding needs, this is largely being done this way to give those with stakes in the San Francisco microblogging company an ability to monetize their privately held common stock and also to do this selling in a more organized — and legal — manner.

That is especially important since the company is not likely to go public for at least a year or more. And, while it could also be sold to a bigger company such as Google, that is also not in Twitter’s immediate future.

Before this secondary follow-on, the first part of the deal will be a $400 million investment for preferred shares by new and also existing shareholders, as was reported by the New York Times last week.

That round will indeed value Twitter at $8 billion, as the Times reported, which is a higher number than in other earlier reports.

This is more than double what Twitter was valued at when it got $200 million in venture funding from Kleiner Perkins in December at a $3.7 billion valuation.

Once the latest investments are complete, Twitter’s total cash haul since it was founded five years ago will be $760 million.

Key new moneybags are expected to be Russian investing heavyweight DST Global, which has invested in Facebook, Zynga and Groupon; as well as the digital growth fund of J.P. Morgan and perhaps others.

Current investors include Benchmark Capital, Union Square Ventures, Spark Capital and several other venture firms, as well as a spate of prominent angel investors.

The latest funding is an important one for Twitter and will up the pressure for its management, including CEO Dick Costolo, to really get its business growing in terms of revenue and profits.

Twitter is still struggling with coming up with a truly lucrative business model, and its execs have presented a number of them, such as promoted tweets, largely based on advertising.

It reportedly has $200 million in annual revenue from its efforts, which is still small in comparison to other Web 2.0 start-ups.

Interestingly, that was a similar situation to where Facebook found itself two years ago, when it allowed its employees to sell 20 percent of their shares.

That financing was part of a $100 million add-on to a $200 million investment in the social networking company by DST. At the time, the tender offer valued the company at $6.5 billion for the common stock, or $14.77 a share.

Of course, Facebook is worth upward of more than 10 times that now, so any Twitter sellers might want to consider their options carefully.

It is not clear exactly who can sell their Twitter shares, and in what amount, in the new deal. When Facebook did a similar move, for example, its top leadership could not sell any of their stakes.

A Twitter spokeswoman would not comment about any fund raising.

But, interestingly, in an onstage interview at a Fortune magazine tech conference this week, Costolo criticized stock trading of the shares of popular start-ups on secondary exchanges as a “distraction.” Like other companies, he said, Twitter had instituted stricter policies to limit the ability of its employees and investors to trade on those markets.

The round includes big institutional investors Morgan Stanley, T. Rowe Price, Fidelity Investments, as well as a token investment from existing venture investor Kleiner Perkins, in order to establish the huge valuation.

The big funding is essentially a precursor to an initial public offering.

Zynga has already raised more than $500 million from a panoply of Silicon Valley VCs such as Kleiner and Andreessen Horowitz, as well as Russia’s DST Global.

Their interest has been in Zynga’s explosive growth in social gaming, with such hits as FarmVille, CityVille and Mafia Wars.

The company grew virally, initially due to its close relationship with social networking giant Facebook.

Since then, it has tried to find other ways to distribute its games, although it still depends largely on Facebook’s audience.

While some worry about Zynga’s reliance on Facebook, as well as its sharing some of its revenue, sources said the company’s sales of virtual goods and advertising is closing in on $1 billion and more annually.

The massive valuation for the San Francisco-based Zynga comes after similar rounds by large Wall Street players in social media hotshots.

Facebook raised $1.5 billion from Goldman Sachs and others and social buying site Groupon raised close to $1 billion from T. Rowe Price, Fidelity and others.

The New York Times reported tonight the round was $250 million and named T. Rowe Price and Fidelity as possible investors. Earlier this week, The Wall Street Journal also had the round at $250 million.

It turns out, however, that Milner–the chief executive of DST Global which made a splash in the U.S. by betting big money on Facebook Inc., Groupon Inc. and Zynga Inc.–was looking to offer to invest his own money in all 43 start-ups recently coming out of Y Combinator’s latest three-month boot camp.

“It’s probably one of the most surprising things that has happened so far,” Graham said.

As TechCrunch first reported, Milner teamed up with SV Angel–the seed fund run by prominent angel investor Ron Conway–to offer $150,000 each in convertible debt in each company.

Read the rest of this post on the original site »

Groupon is in talks with Chinese Internet giant Tencent to form a partnership to accelerate its effort in the critical Asian arena, said several sources with knowledge of the situation.

Terms of the deal are unclear, but sources said that it is likely to involve some sort of co-branded joint venture effort between the two–a key strategic move for Groupon, given the hard-to-penetrate-if-you’re-not-Chinese Chinese market.

More typical for Groupon has been to buy a top local player abroad and rebrand it, such as its launch of Groupon Hong Kong, Groupon Singapore and Groupon Philippines and Groupon Taiwan through the early December acquisition of daily deal sites uBuyiBuy, Beeconomic and Atlaspost, respectively.

Moving into the lucrative international arena, where there are innumerable clones of the dominant social buying service, is one of the big strategic reasons for Groupon’s recent $1 billion funding and also last week’s very noisy IPO toe-dipping.

(How much is BoomTown wishing I could be a fly on the wall to see all those investment bankers courting kooky Groupon CEO Andrew Mason? Memo to Andrew: Act like Snooki from “Jersey Shore” and see how they still slavishly kiss up to you like the soul-sucking suck-ups they are.)

Back to China, where cloning popular U.S. Internet brands has become an art form.

That includes one particularly appalling rip-off (pictured here) in China that looks exactly like Groupon and is actually called Groupon.cn.

(Although you’ve got to be in awe of the complete non-effort to pretend it is anything but a complete shoplifting of the brand.)

But, no matter how much that digital swiping goes on, much of Groupon’s growth recently has been outside the U.S., and the company’s strategic future lies internationally.

Of course, global expansion–especially in the famously difficult Chinese market, where the government favors native companies to an unprecedented degree–has stymied many other U.S. Internet phenoms, from eBay to Google to Facebook. (In fact, for obviously thorny privacy reasons, the social networking site has no presence in China.)

But for Groupon, especially with its public offering plans and need to distance itself from close rivals such as LivingSocial, it is a must-do to reach the deal-crazy and huge audience in China.

Thus, having Tencent as its partner is an obvious plus, given it is one of the biggest Internet services in the country, including its huge QQ instant messaging offering.

In addition, there is a strong link between Tencent and one of Groupon’s key investors, Mail.ru Group.

Mail.ru owns five percent of Groupon, said numerous sources, and Tencent is an investor in Mail.ru, which recently had an IPO.

And DST Global, an investment vehicle that is now separate from Mail.ru–although it shares Russian exec Yuri Milner, who is Mail.ru’s chairman and also DST’s CEO–is also a Groupon investor.

Got all that? As BoomTown has written before: It’s a small and way-too-connected world after all, especially when it comes to the goat rodeo of Groupon investors.

What will be interesting to see is if this makes a difference in China, which has been a consistent black hole for most major Internet companies.

Groupon declined comment, and there has been no response yet to an email query sent to Tencent’s PR group.

Next week, at the DLD conference in Munich, Germany, BoomTown will be interviewing one of my favorite start-up CEOs: Andrew Mason of Groupon.

And what’s my very first question for the adorkable toast of the digital town, who has just collected a billion dollars in funding, giving his hot social buying site a $4.75 billion valuation?

No, it’s not about what Mason is going to do with all that moolah.

Not, it’s not about why Groupon spurned the $6 billion acquisition offer from Google (and the Yahoo one before that).

No, it’s not about what hair care products Mason uses to get his hair looking so much like Justin Bieber’s coif.

Most of all, what I want to know is how he’s going to manage his ridiculously large–and, let’s be honest, very opinionated–investor group, which is made up of a big chunk of the digital arena’s most prominent VC firms, institutional investors and angels.

Consider the list, which is much more diverse than Facebook’s at a similar time in its gestation (and, in fact, it feels a lot like the social networking site’s current investor stampede):

Andreessen Horowitz, Battery Ventures, Greylock Partners, Kleiner Perkins Caufield & Byers, Mail.ru Group (formerly DST Global), Maverick Capital, Silver Lake, and Technology Crossover Ventures, New Enterprise Associates, Accel Partners, T. Rowe Price, Fidelity, Capital Group, Morgan Stanley, former AOL exec Ted Leonsis and others.

(How in the world is the ubiquitous Ron Conway not shoved in this pig pile? Or is he?)

And, of course, the inevitable Allen & Company acted as financial advisor for this massive funding, which also feels like a bit of a private pre-IPO.

It will be interesting to see exactly whom among this shareholder group that Mason and the other top Groupon execs will listen to and who will have the most influence over the next year.

None of the new moneybags got a board seat, which is probably a good thing. As most entrepreneurs know all too well, investors can be a tricky thing–at once helpful and then not so much.

Mason, a clearly gifted exec, certainly has his hands full now, managing expectations for the fast-growing company, as well as the business itself.

Let’s hope that now that this surreal investor sideshow circus is over, that Groupon’s precious time can be focused on just that.

Groupon has officially completed the raising of half of a $950 million funding, getting $500 million from a range of top-drawer investors, said sources close to the situation.

Those investors include Russia’s DST Global, T. Rowe Price, Fidelity, Capital Group and Morgan Stanley.

It’s unclear how much each investor has put in and who will make up the next tranche of funding, which will also close imminently.

The New York Times previously reported on the regulatory filing related to the funding, as well as investments from T. Rowe Price, Fidelity and Morgan Stanley.

Now completed, the investments value the Chicago-based social buying service at $4.75 billion, which is less than the $6 billion Google offered to buy Groupon.

Those acquisition talks failed. But Groupon is still attracting interest from other possible buyers.

For now, though, it’s just talking a pile of money–probably the right strategy–to keep growing its explosive business. A big chunk will also go to some Groupon execs and early investors.

Groupon has competitors, of course, such as LivingSocial, but has established itself as the leader in the local online discounting space.

Allen & Co. is advising Groupon on the fundraising.

A Groupon spokeswoman declined to comment.

Yesterday, star venture capitalist John Doerr of Kleiner Perkins forked over $150 million in funding to Twitter.

At at $3.7 billion valuation, that got him a big chunk of the San Francisco microblogging site.

But what it didn’t get him was a seat on the board of Twitter, which many figured he would be given for after handing over so much moolah.

According to sources familiar with the situation, that’s due to Doerr’s being a director on another board: Google.

Several sources who BoomTown spoke to, after breaking news of the massive funding, said that his being on the board of the search giant was seen as too much of a conflict of interest.

A conflict because Google has plans to wade deeply into the social space. And also, of course, because it is the No. 1 potential acquirer of Twitter, as the Silicon Valley company seeks to gather more tools to fight its latest rival, Facebook.

Doerr has very deep ties at Google, having been on its board since mid-1999.

He got that seat, along with Sequoia Capital’s Mike Moritz, after he ponied up a critical $25 million equity round for Google in June of that year.

Interestingly, no other Kleiner partner was named to a Twitter board seat either.

But, some speculate, it might make sense for Mary Meeker–who just joined Kleiner to head up digital investing efforts, after a long-time stint as a Wall Street analyst for Morgan Stanley–to eventually become a Twitter director.

Meeker has, of course, deep IPO and M&A experience.

And, frankly, after adding Flipboard’s Mike McCue and former DoubleClick exec David Rosenblatt yesterday and former Netscape exec Peter Currie recently to its all-boy board band, a woman director might be a good idea to consider.

Other directors at Twitter include Benchmark Capital’s Peter Fenton, Union Square Venture’s Fred Wilson, Bijan Sabet of Spark Capital, Co-founders Evan Williams and Jack Dorsey and CEO Dick Costolo.

I reached out to Doerr for a comment, but he has not yet replied; Twitter declined to comment.

Even more interesting to consider is what Kleiner will invest in next after this mega-funding, given how aggressively many sources said Doerr had pushed to lead the Twitter round.

And, in fact, sources said that Kleiner is looking closely at new funding rounds for both the Spotify music streaming service and Groupon, the social buying start-up that recently decided to turn down a $6 billion acquisition offer from Google and an earlier $3 billion one from Yahoo.

Groupon is now seeking more funds to remain independent and hold onto its lead in the fast-growing local discounting market, sources said.

(Bloomberg also reported on Groupon’s new fundraising efforts, although it was written about after it turned down the Google offer.)

And Spotify, which is hugely popular outside the U.S., is trying to enter this market, but needs more funding to expand and perhaps strike better deals with music labels.

Both are the just the kind of companies Doerr has targeted in what looks like a serious effort to compete with other firms–especially Andreessen Horowitz and Russia’s DST Global.

They have garnered the heat Kleiner used to have, largely by backing more of the top entrepreneurs recently.

Doerr has already put money into social gaming phenom Zynga and also started an sFund for social-focused investments.

Add Twitter to the pile and you can see where this is headed: Except for the board seat, John Doerr will no longer be denied.

Twitter has completed its latest round of funding–$200 million at a $3.7 billion valuation–with Kleiner Perkins as the lead investor, according to sources familiar with the situation.

Sources said the San Francisco microblogging service is also adding two new board members: Flipboard’s Mike McCue and David Rosenblatt, who ran DoubleClick until a bit after it sold to Google.

Twitter recently added former Netscape exec Peter Currie to the board, as BoomTown previously reported.

A Twitter spokesman confirmed the funding and the board appointments, but declined further comment.

The moves are big ones for Twitter, which is moving fast to upgrade its management and business model under CEO Dick Costolo, who just posted a blog (see below) on the new funding and directors, titled “Meaningful Growth (although it was first curiously called, “Stocking Stuffers,” and was much funnier).

But, indeed, a big slug of cash will surely help the start-up’s expansion efforts and essentially declares it is not for sale to bigger companies such as Google (quite yet, that is).

As I reported last week, Kleiner partner John Doerr has been pushing hard to fund Twitter, beating out Russia’s DST Global.

Kleiner is the only new investor in the latest round, which brings its funding total to $360 million since it was founded about five years ago.

The storied Silicon Valley venture firm, which has been aggressively moving into the Web 2.0 space of late, put in $150 million, with the remaining $50 million coming from existing investors.

Past investors include Benchmark Capital, Union Square Ventures, Spark Capital and several other venture firms and angel investors.

Adding Currie, McCue and Rosenblatt are very strong choices for the board. Currie has deep financial and IPO experience, McCue is a well-connected and innovative entrepreneur and Rosenblatt brings much-needed online advertising heft.

As it happens, Costolo will appear at our D@CES event in January, where I am interviewing him and we can talk about all the changes.

(Thank goodness the funding is done, since I was worried about all those awkward pauses.)

Here is new version of Costolo’s blog post on McCue and Rosenblatt (the old one is below it for you to compare and contrast):

Meaningful Growth

In the past 12 months, Twitter users sent an astonishing 25 billion Tweets and we added more than 100 million new registered accounts. In that time, our team has grown from 130 people to more than 350 today. We’re thankful for every Tweet, every account, and every talented employee who has decided to join the Twitter team. This week, we’ve got some big news to share.

As part of a significant new round of funding with investor Kleiner Perkins Caufield Byers and existing investors, we’ve added two new members to Twitter’s board of directors. Please join us in welcoming Mike McCue and David Rosenblatt. The experience these new directors bring to Twitter, along with this renewed investment, will help us continue to grow as a company and business.

2010 was one of the most meaningful years since Twitter, Inc. was founded in 2007. We operate on a principle that people are basically good–when you give them a simple way to express this trait, they prove it to you every day. We’re proud of what Twitter users have accomplished, we’re proud of our work, and we’re very proud of our team. Thanks for being a part of this work; it means a lot to us.

Stocking Stuffer

Growth is fun. In the past 12 months, Twitter users sent an astonishing 25 billion Tweets and we added more than 100 million new registered accounts. In that time, our team has grown from 130 people to more than 350 today.

This week, we added two new members to Twitter’s board of directors who have strong experience running technology companies: Mike McCue and David Rosenblatt. Mike was the CEO of Tellme Networks, is currently CEO at Flipboard and also worked for Netscape and Microsoft (which acquired Tellme in 2007). David is the former CEO of DoubleClick and an ex-Google executive.

We also closed a significant new round of funding, with new investor Kleiner Perkins Caulfield Byers leading the round. KPCB brings to Twitter a track record of helping build great companies, ranging from Amazon to Zynga (get it? A to Z? See how we did that?), and a team with expertise in Internet, mobile and social platforms. The additional resources and expertise will be extremely helpful as Twitter continues to grow as a company and business.

Thank you to Twitter users everywhere for making 2010 such a good year.

According to sources close to the situation, the aggressive Russian investment outfit DST Global is out of the running to fund Twitter.

Instead, the prize is almost certainly going to Kleiner Perkins, the legendary Silicon Valley venture firm of Web 1.0 that has been making a big push of late into the Web 2.0 market.

The valuation for the new round–which sources said is well above $150 million–will be from $3.5 billion to $4 billion.

And it is not clear if there are any other smaller investors in this funding, but sources said that was likely.

Sources added that the San Francisco microblogging service will be completing its newest round of funding next week, although Twitter might not even announce it publicly.

The new round will be the first in a year for Twitter.

In the fall of 2009, Twitter raised funding at a $1 billion valuation to help spur its growth to its current size of 325 employees, serving its 175 million users.

Such growth was of interest to DST, which has made giant investments in social networking giant Facebook, social gaming rocket ship Zynga and Groupon, the social buying site that recently ended acquisition talks with Google.

Twitter moving into its next phase of development is an attractive target for many VCs, as it seeks a lucrative way to monetize its popular business.

And, in fact, Kleiner star VC John Doerr has been making a big push to be the big investor in this key next round for Twitter, which also has had regular acquisition interest from both Google and Facebook.

What will be interesting to see is if acquisition interest in Twitter from the pair spikes, given the collapse of Google’s attempt to buy Groupon.

The talks with Twitter began, according to several sources, after Kleiner had considered investing in PostUp–the Twitter search engine and advertising platform start-up from Bill Gross’s Idealab, which was first called TweetUp.

PostUp irked Twitter, and its CEO Dick Costolo was particularly vocal about not allowing third-party ad rivals to create a spammier service.

Sources said it was Bill Campbell, well-known Silicon Valley exec and adviser to multiple companies such as Google, who brought Kleiner and Twitter into discussions.

Campbell’s latest coaching task has been at Twitter.

Kleiner has also recently stepped up its Web 2.0 game with the hiring of high-profile Wall Street analyst Mary Meeker of Morgan Stanley.

She has been brought in to help turbocharge the firm’s digital investment portfolio, especially in social, mobile and commerce.

The move has underscored Kleiner’s noisy intent of late to jump into the social Web market.

After scoring a late entry into the scene with its investment in the fast-growing social gaming start-up Zynga, Kleiner has made a big marketing push recently to allocate a dedicated $250 million “sFund” to social start-ups.

NetworkEffect’s Liz Gannes first wrote of Kleiner’s interest in Twitter a week ago, followed by a report a day later in TechCrunch about Kleiner’s primacy in the Twitter funding race and Doerr’s fervent effort to land the investment.

None of the players mentioned here has responded to BoomTown’s request for a comment.