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Twitter Makes One of the Largest Venture Capital Deals in History

Twitter Makes One of the Largest Venture Capital Deals in History

"There's nothing else bigger out there."

Having just landed an $800 million venture capital deal, Twitter is quickly cementing its position as one of the strongest and most fearsome players in the microblogging world.

According a recent report, the Russian venture firm DST Global has just invested more than $400 million in new shares in this round of Twitter’s venture capital.

In addition to the $400 million investment, there is another $400 million investment being made that will allow Twitter employees and investors to cash out some of their shares.

This puts the total raised by Twitter--in just this round alone--at $800 million, which puts their overall worth at about $8 billion: more than double since its last venture round in December 2010.

This is Twitter’s seventh round in the capital venture market and they have done very well for themselves. They have already gone through the most basic rounds including:

First-round: Early sales.

Second-round: Working capital for early stage companies that are pushing a good or service, but have yet to turn a profit.

Third-round: Also called Mezzanine financing (which increases the long-term capital base of an investee company without significantly diluting shareholders' control) which involves expansion money for a newly profitable company.

Fourth-Round: Also called bridge financing. This round is intended to finance the "going public" process between the first round and the fourth round. Venture backed companies may also seek to take "venture debt.”

Since they established their financial stability, Twitter has been met with nothing but success. In a statement released by Twitter, DST Global founder Yuri Milner called Twitter "one of the few companies that has truly changed the world." He added, "We couldn't pass up the chance to be a bigger part of its future."

The $400 million injection Twitter is receiving breaks most records for venture capital deals. "There's nothing else bigger out there," said John Taylor, research chief for Virginia-based National Venture Capital Association.

Other companies that have come close to this number are Groupon ($950 million), the wireless broadband company Clearwire ($900 million), and Western Integrated Networks ($889 million but was later  forced to sell its assets to SureWest Communications in 2002 for $12 million).

Twitter in a statement said it would use the money "to aggressively innovate, hire more great people and invest in international expansion." It noted that in the past year, its head count has grown to 600, and it has more than tripled the number of tweets transmitted each day, to more than 200 million.

Twitter was launched July 15, 2006, which means that it is only 5-years-old. To have achieved what they have in such a small amount of time is no small deal and it looks like they will continue to grow and play a major role in the social-networking market.

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