MercoPress. South Atlantic News Agency

In less than a year Twitter’s value has soared to 3.7 billion USD

Dick Costolo, CEO and the architect of the advertising effort

Twitter has raised 200 million US dollars of financing in a deal that value the micro-blogging company at 3.7 billion, less than a year after it began its first serious efforts to make money.

The funding, from Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers and existing Twitter investors, underscores the high hopes that investors have for Internet social networking companies.

”It's a huge multiple. But the idea is that (Twitter's) scale can be monetized,“ said BGC Partners analyst Colin Gillis, who estimated that Twitter's annual revenue was currently under $100 million.

The money will help Twitter expand the company, Twitter said in a post on its corporate blog on Wednesday. The blog post did not elaborate and a spokesman declined to offer specifics.

Twitter, which had 175 million users as of September, is among the new crop of quickly growing Internet social networking services. Others include Facebook and Zynga.

Facebook, the world's No. 1 Internet social networking company, is valued at more than 45 billion USD in recent stock purchase transactions on the secondary market, according to Sharespost, an online exchange for trading shares in private companies.

Investors are watching services like Facebook and Twitter closely, hoping one day to buy public shares of the company.

BGC's Gillis said Twitter's new valuation could push an IPO further down the road, as Twitter would need to ”grow into the valuation” and generate more revenue to justify it to public market investors.

Twitter also announced that it had added two new board members -- FlipBoard Chief Executive Mike McCue and DoubleClick CEO David Rosenblatt.

The moves come two months after the four-year-old company handed the job of chief executive to Dick Costolo, the architect of its new advertising efforts, a sign that making money is a priority for the service.

Costolo told Reuters in May that Twitter planned to have hundreds of advertisers using its ad system by the end of the year. He said the company's previous valuation of 1 billion USD meant that it was incumbent on Twitter to develop a business that can generate hundreds of millions of dollars of revenue.

Twitter had raised 160 million in four earlier funding rounds, from investors that included Spark Capital, Institutional Venture Partners and mutual fund company T. Rowe Price.

Technology blog AllThingsDigital first reported the $200 million funding round. It said that Kleiner Perkins beat out Russian investment firm DST Global. The Twitter spokesman confirmed that the figures were accurate.

Twitter, which allows users to send 140-character text messages, or Tweets, to followers, has become a popular communications tool for celebrities, politicians and businesses, and has played a role in several geopolitical events, such as the 2009 post-election demonstrations in Iran.

The service, along with Facebook, is increasingly challenging established Web services like Google Inc and Yahoo Inc for the time that consumers spend online.