Twitter Entering the Venture Capital World

Twitter raised hundreds of millions of dollars in venture capital before it held an IPO last November. Now it may be making its own venture bets.

Buried under all the chatter about Twitter’s new chief financial officer was the fact that the company is starting a new strategic investments group. Mike Gupta, who was replaced as financial chief by former Goldman banker Anthony Noto, will head up the new corporate VC arm.

Twitter isn’t saying much yet about the group, but the rough objective will be to make investments outside of Twitter. Given Gupta’s title — senior vice president of strategic investments — it’s likely that Twitter would make investments only in startups that are strategically beneficial as many corporations do. Another possibility is it could become like Google Ventures, which operates independently from Google Inc. and makes investments for financial gain.

Twitter is sitting on a pretty pile of cash thanks to its IPO that raised as much as $2.1 billion. Twitter said it had $960.7 million in cash and $1.2 billion in short-term investments as of the end of the first quarter.

While Twitter has been making a steady stream of acquisitions, none have been anywhere near the blockbuster deals seen at Facebook FB -0.51% or Apple AAPL +0.01%, which of course have far more cash and stock to work with. In February, Facebook agreed to acquire messaging company WhatsApp for $19 billion in cash and stock while Apple paid $3 billion to purchase Beats Electronics in May.

The corporate venture-capital world is a mix bag in tech. Many large tech companies, like Apple and Facebook, have refrained from starting up venture-capital arms, instead preferring to make investments through acquisitions. Others, like Microsoft MSFT -0.23%, have small seed funds. And then there are the giants like Google Ventures and Intel Capital that make dozens of investments per year.


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Josh Sandberg

Josh Sandberg is the President and CEO of Ortho Spine Partners and sits on several company and industry related Boards. He also is the Creator and Editor of OrthoSpineNews.

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