Is Twitter Big Enough to Be in Venture Capital?
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When technology companies start venture capital arms, it's typically because they have massive balance sheets and need to find productive ways to put idle cash to work.
Intel and Qualcomm, the most valuable U.S. semiconductor companies, have been venture powerhouses because of their ability to write big checks, and Google has jumped onto the scene in a big way with a venture group and a late-stage unit called Google Capital.
Twitter, by contrast, is quite small.
As popular as the site has become by letting anyone say anything in 140 characters or less, the San Francisco-based company's cash position is a fraction of the biggest tech companies. And yet Twitter Ventures is open for business.
We know that because Twitter Ventures was the first investor listed in a press release on Tuesday from mobile operating system Cyanogen, which announced that it has raised $80 million. Other investors include Qualcomm, Telefonica Ventures and Rupert Murdoch.
We don't know much else. Twitter Ventures doesn't have an online presence (twitterventures.com says "website coming soon"), and Mike Gupta, the company's former finance chief, has been mum about his new role as head of strategic investments.
Twitter declined to comment.
Seemingly every company, whether in tech or any other industry, wants in on the start-up action. In the second quarter of last year, corporate VCs participated in $4.02 billion in financings, up from $1.73 billion in the same quarter a year earlier, according to CB Insights.
At the end of 2014, Twitter had $3.6 billion in cash and marketable securities, unchanged from the third quarter and up from $2.2 billion a year earlier. Compare that with $14 billion for Intel, $18 billion for Qualcomm and $64 billion for Google.
However, SAP, whose venture arm was spun out in 2011 and recently renamed Sapphire Ventures, has a comparable cash position to Twitter, with about $3.7 billion in cash and equivalents.
Because of Twitter's scale, popularity and the cool factor that it still maintains, the company can get access to deals that would likely be unavailable to other VCs. Cyanogen, whose mission is to open up the Android operating system, didn't say what portion of the financing came from Twitter, but given the prime billing, it certainly wasn't hiding the news.
Whether this was a one-off strategic deal for Twitter or the start of something big in venture, we'll have to wait to hear from the little blue birdy.