Browsed by
Tag: user base

Venture Capitalists to lose $100 Million Investment

Venture Capitalists to lose $100 Million Investment

The stage is set for a collaboration between T. Rowe Price and Insight Venture Partners to lose $100 million dollars today in an announcement that the team will be investing in Twitter.

In terms of dollars per user, the T. Rowe team and Insight Venture Partners value each user of the Twitter micro-blogging sight at nearly $40 a head, giving Twitter an estimated total value of $1 billion . The only remaining problem for the partners is how to milk that $40/user out of the jaded user base. Some internet entrepreneurs liken monitization of Twitter to “squeezing water from a rock”.

Twitter, the newest overnight internet sensation, is a text message propagation website with minimal revenue and no working business model to speak of. It differentiates itself from other blogging sites in that it only allows 140 characters or less in blog posts, which is a little less than half the number of characters in this paragraph.

Time will tell whether this investment will pay off, but it seems the lessons learned by venture capitalists in the late 90’s has not yet sunk in for the Price-Insight team.