So Twitter Is Going Public… Who Gets Rich?


Massive quantities of cash will soon be passed around . So who will get chunks of foldable cash?

From Venture Capital Dispatch:

Twitter today announced–in a tweet, of course–that it has submitted a confidential IPO filing, setting in motion plans for the most-anticipated tech offering since Facebook Inc.

So which investors are poised for big payoffs when Twitter finally goes public?

The company has a lot of backers, but the ones who stand to make the biggest return are the early investors who climbed aboard the Twitter wagon in one of its first two rounds of venture funding.

In 2007, the company received its first round of venture backing from investors including:

Union Square Ventures: The New York-based firm has backed a lot of high-profile startups, including Tumblr, Zynga, Etsy, Foursquare and Kickstarter; Managing Partner Fred Wilson is a prominent voice in the venture world, with a well-read blog.

Charles River Ventures: The firm, with offices in Cambridge, Mass., and Menlo Park, Calif., has backed Dropbox, Yammer, Zendesk and Scribd.

Marc Andreessen: The Netscape Communications founder and co-founder of venture firm Andreessen Horowitz has become one of the giants of the Silicon Valley venture scene. His firm has backed most of the hottest startups in the last few years including Facebook, Foursquare, Groupon, Skype, Pinterest and Airbnb.

Ron Conway: The most famous angel investor in Silicon Valley has backed hundreds of startups, including Google, Facebook, Zappos, Square, Airbnb, Dropbox, Pinterest and Foursquare. He was included in 2010’s Vanity Fair 100 most influential people in the Information Age.

Naval Ravikant: The entrepreneur and investor has become a major Silicon Valley figure by founding AngelList, an online platform where early-stage startups can connect with potential investors. He has backed companies including Uber and Yammer.

In 2008, the following investors came aboard for Twitter’s second financing round:

Spark Capital: The firm, founded in 2005 and with offices in Boston and New York, has backed Tumblr and Foursquare, as well as dozens of other companies including eyeglasses e-commerce company Warby Parker.

Bezos Expeditions: The personal investment vehicle of founder (and new Washington Post owner) Jeff Bezos has backed companies including Airbnb, Uber and 3-D printing company MakerBot.

Since those first two rounds, Twitter has raised millions from investors scrambling to be part of one of the world’s hottest Internet companies — and paying more for ever-smaller percentages of company stock, as Twitter’s valuations has risen. Its stock has reached valuations of up to $9 billion in secondary sales, meaning investors that backed the company early and received in the neighborhood of 10% of company shares stand to make a killing.

Other Twitter backers include Benchmark Capital, BlackRock Private Equity Partners, Insight Venture Partners, Institutional Venture Partners, Kleiner Perkins Caufield & Byers and even mutual fund T. Rowe Price.

The company utilized the option of a confidential IPO filing, a practice permitted by the 2012 Jumpstart Our Business Startups Act, or JOBS Act, as a way to make going public easier for small companies who wanted to test the waters before publicly disclosing their finances.

One advantage of the secret filings is that companies can work out some of the technical kinks in their IPO plans without revealing any sensitive financial information, like revenue, until they absolutely have to.

Twitter’s revenue is thought be less than $1 billion, since that is the threshold for companies using the confidential IPO filing option.

Such filings are secret until the company files its S-1 with the Securities and Exchange Commission. Many companies are thought to have taken advantage of this provision, but most don’t disclose that they have done so.

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