The Twitter fund-raising led by John Doerr of Kleiner Perkins Caufield & Byers which values Twitter at $3.7bn is interesting in several ways. One of them is what it says about the emerging rivalry between venture capitalists in Silicon Valley and those in New York.
Mr Doerr was known for Kleiner Perkins’ green energy investments, but the venerable venture capital outfit has recently been eager to get into the social media boom. It even conceded a valuation of Twitter high enough to beat out Yuri Milner of Digital Sky Technologies.
However, Union Square Ventures, the New York venture capital fund that lies at the heart of the “Silicon Alley” revival and was an early investor in Twitter is reported not to have invested in this round.
As Twitter’s valuation has risen, Union Square has opted not to re-invest because, at the elevated valuations Twitter now commands, it would absorb too much of Union Square’s venture funds. Fred Wilson of USV has written on his blog about his insistence on not chasing rising valuations.
Union Square is still an important investor in Twitter. However, the Kleiner Perkins-led round, for which is paid about $150m, is a clear sign that Silicon Valley does not want to get squeezed out of its leading investment role in the internet – either by Russian investors or those from New York.
