Twitter Inc. co-founder Evan Williams is now a billionaire on paper, after the short-messaging website set a share price for its initial public offering above a proposed range.
Williams, the largest individual shareholder, will own 10.4 percent of the San Francisco-based company after its market debut with a stake valued at $1.48 billion. The shares are set to begin trading on the New York Stock Exchange today.
Williams, who co-founded Twitter in 2006 out of his failed podcasting startup Odeo, is among the biggest beneficiaries of the IPO. Others include early backers such as Rizvi Traverse Management LLC, which holds almost 16 percent valued at $2.21 billion. The insiders held onto their shares, indicating that they anticipate that Twitter will deliver on its promises to increase advertising revenue and add more users.
Twitter's shareholder base has swelled to include venture-capital investors such as Benchmark and Union Square Ventures and celebrities such as Ashton Kutcher and Richard Branson. In all, Twitter has raised more than $700 million in private capital. The company is selling $1.82 billion of shares in the IPO, the biggest U.S. technology offering since Facebook Inc. 's debut last year.
Jack Dorsey, a Twitter co-founder who already became a billionaire this year from his stake in payments company Square Inc., will add $609.8 million to his fortune, including options. Union Square Ventures, which contributed a few million dollars in Twitter's first investment round in 2007, has a stake of about 5.1 percent, worth $723.8 million.
Lockup Period
At the IPO price, Twitter is being valued at $14.2 billion. Spark Capital, which invested in the company in 2008, will own about 6 percent of Twitter's shares, worth $842.8 million. Benchmark, which led a $35 million investment in Twitter in 2009, bought another $9.1 million in shares in 2011. Its stake is worth $820.7 million.
Twitter's executives and directors won't be able to sell their stock for 180 days, a standard lockup waiting period. Some non-executive employees may be eligible to sell almost 10 million shares as soon as Feb. 15, the prospectus shows.
Chief Executive Officer Dick Costolo has been talking to employees about managing their personal finances at the company's weekly meetings, according to a person with knowledge of the matter, who asked not to be identified because the discussions are private.
Minting Wealth
The insiders are taking a risk by holding their shares, as other recent consumer-technology companies have struggled in the months following their market debuts. Facebook's stock dove below its $38 offering price and took more than a year to recover. Groupon Inc. is down 50 percent from its 2011 IPO price, while Zynga Inc. has declined 63 percent.
Twitter, which posted a loss of $64.6 million in its latest quarter, isn't projected to report a profit until 2015, according to analysts' estimates compiled by Bloomberg.
Facebook's debut last year created 850 new millionaires, many of whom decided to invest their wealth in emerging technology companies such as Instagram Inc., Spotify Ltd. and Flipboard Inc. They also looked for new places to live, contributing to surging real-estate values in Silicon Valley.
Facebook raised $16 billion, valuing the social network at $104 billion in the biggest technology debut on record. More than 50 individuals and institutions own Twitter shares through direct purchases, secondary sales and acquisitions, and hundreds more are invested through funds.
To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net
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