Twitter’s $1 billion signals start of new tech bubble

Twitter co-founder Evan Williams has confirmed the micro-blogging website’s success in raising a “significant” amount of funding in a blog post over the weekend.

Although Williams did not confirm the amount of funding raised, it is widely believed to be US$100 million, based on a company valuation of US$1 billion.

“We’re excited to publicly thank Insight Venture Partners, T. Rowe Price, Institutional Venture Partners, Spark Capital, Benchmark Capital, and Morgan Stanley,” Williams says.

The previous and first-time Twitter investors signed off on the deal last Thursday.

The US$1 billion valuation comes despite the company having no real revenue stream. It values the company at the same price that General Motors held before it went bust.

The capital raising also sent a wave of excitement through Silicon Valley which has been waiting impatiently since the tech wreck in 2000 for a new internet start-up bubble to form.

“Twitter’s journey has just begun and we are committed to building the best product, technology and company possible. I’m proud of the team we’ve built so far and I’m confident in the future we’ll build together,” Williams says.

“It was important to us that we find investment partners who share our vision for building a company of enduring value.”

Although an analyst at Sanford C. Bernstein in New York put it another way, saying the investment represented smart money waiting for dumb money to come in and bail it out.

The latest round of funding brings Twitter’s total capital raised to US$155 million in the past two years.

Earlier this month, Twitter announced it is considering options for including advertising on the site, including targeted business advertising. However, Williams has said advertising will not appear on the website, which has 45 million users worldwide, before the end of this year.

Over the weekend, Twitter users used the site to leak results of Germany’s federal election polling.

German officials said they would investigate Twitter leaks, which contained broadly accurate exit poll results one hour before voting had ended.