The blogosphere and tech press is all atwitter about the news that Saudi Prince Alwaleed Bin Talal invested $300 million in Twitter. While the identity of the Saudi prince as an investor was not officially confirmed before, the investment itself is not new. The investment was part of the previously announced $800 million financing Twitter closed last September, according to a source with direct knowledge of the deal.
Fortune’s Dan Primack reports that the Saudi shares were a purchase of secondary shares. Indeed, half of that $800 million didn’t even go to Twitter. They were secondary shares purchased directly from employees and other existing investors. It appears that the Saudi prince took three quarters of the $400 million tranche set aside for secondary sales.
Twitter still had to approve these secondary sales, which provided a necessary release valve for employees with vested options. You could even argue that Twitter should allow employees to sell even more shares, given that some of them are leaving in order to do just that.
Twitter, founded by Jack Dorsey, Biz Stone, and Evan Williams in March 2006 (launched publicly in July 2006), is a social networking and micro-blogging service that allows users to post updates 140 characters long. Twitter “is a real-time information network that connects [users] to the latest stories, ideas, opinions, and news.” The service can be accessed through a variety of methods, including Twitter’s website; text messaging; instant messaging; and third-party desktop, mobile, and web applications. Twitter is currently available in...
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