Twitter's biggest investors stand to own about a billion dollars in stock when the company goes public, but while those venture firms — including Spark Capital and Union Square Ventures — invested big and repeatedly in the social platform, one of the IPO's biggest winners will be a much smaller, early investor.
Charles River Ventures put a mere $250,000 into Twitter in its earliest days. The firm's stake is poised to be worth more than $100 million when the company goes public later this year at a valuation that's expected to be more than $10 billion, according to information from earlier funding rounds and people familiar with the company's investments.
Charles River Ventures, like Twitter CEO Dick Costolo and some of the company's earliest investors, are expected to get a return that is hundreds of times what they put in. Costolo's stake will likely to be worth more than $10 million off an initial $25,000 investment, according to The New York Times. Spark Capital and Union Square Ventures will both have stakes worth at least $1 billion according to the same report, but they also invested in later rounds.
Charles River's investment, spearheaded by partner George Zachary, came when Twitter's precursor, called Odeo, appeared to be failing. But Twitter, a side project by Ev Williams, Jack Dorsey, and others, showed early promise. A decade later the company is one of the largest media platforms on the world and is, essentially, where news breaks first.
Such risky early bets are often career-making successes for investors. Peter Thiel, a founder of PayPal, was one of Facebook's earliest investors and ended with a stake that was worth hundreds of millions from an initial $500,000 investment. These investments are rare, but the absolute return is as close to a home run as it gets in the venture capital community. And it does show a level of continuing risk — and faith — when the investor does not sell shares over time as the company's valuation increases.
Charles River Ventures has also invested in Dropbox, another heavily watched startup in the online storage space, as well as Yammer — which sold to Microsoft for more than $1 billion.