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Twitter Investment Said to Value Company at More Than $3 Billion

December 03, 2010, 12:04 AM EST 

Dec. 3 (Bloomberg) — Twitter Inc. is considering a funding round that would value the company at more than $3 billion as investors clamor for a stake in the social-networking service, according to three people familiar with the matter.

The financing may include new investors, such as venture- capital firm Kleiner Perkins Caufield & Byers and Russian investment company Digital Sky Technologies, said two of the people, who declined to be named because the fundraising isn’t public. Sean Garrett, a Twitter spokesman, declined to comment.

Fresh funding would help Twitter broaden its service and attract more users, now numbering more than 175 million, while lessening pressure to do an initial public offering. In October, Twitter named operations head Dick Costolo as chief executive officer, after he helped the company start an advertising program that attracted companies such as Starbucks Corp. He replaced co-founder Evan Williams.

Started in 2006, San Francisco-based Twitter raised $100 million in September 2009, when it had about 25 million users. That round included T. Rowe Price Group Inc., Insight Venture Partners, Spark Capital and Institutional Venture Partners. The valuation was about $1 billion, a person familiar with the matter said at the time. In January, Costolo said that an IPO is still “way out” for Twitter.

Redesigned Site

The service, embraced by actors, politicians, athletes and company executives, lets users broadcast messages of no more than 140 characters. In September, Twitter revamped its website to make it easier to post photos, video and maps directly on the page. The redesign also gives marketers a new way to use multimedia in online promotions.

The company needs cash to expand its workforce and build data centers to handle increasing traffic. Twitter said in July it was opening its own managed data center in Utah and that it planned to add similar data centers in the next 24 months.

Twitter ranks third globally among social-networking sites, topping News Corp.’s MySpace, according to ComScore Inc. in Reston, Virginia. Facebook Inc. is No. 1, and Windows Live Profile from Microsoft Corp. is second.

Twitter’s fundraising efforts were previously reported by the TechCrunch blog.

–Editors: Nick Turner, Tom Giles

To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net; Brian Womack in San Francisco at Bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net