Twitter had been an infrequent corporate venturer with more of a focus on acquisitions. But it had ramped up activity in the past year.
With all the attention on whether Elon Musk would or could actually buy media platform Twitter, it has been hard to remember that crypto exchange group Binance agreed to invest $500m to support the buyout.
Binance sees this as “an R&D [research and development] opportunity” to apply blockchain and web3 technology to Twitter, chief strategy officer Patrick Hillmann told media group Axios.
Quite what shape this takes remains to be seen but if it helps provide trust and validation of users to control the bots and shills then it could impact other web2 platforms and by extension the social square of debate. At the same time it could use the wisdom of crowds to make market predictions.
Binance’s decision to put such a large corporate venture capital investment in the take-private of Twitter is in contrast with Twitter’s own CVC activity while as a public company.
Twitter has been an infrequent corporate venturer, with its corporate development and investment team concentrating more on mergers and acquisitions (M&A), such as OpenBack, Scroll, Revue, Interana, Aiden.ai, Smyte, Lightwell and MoPub ($1.05bn sale to AppLovin).
But it had been ramping up minority investment activity in the past year. Interestingly, Twitter backed the $3m seed round of Facemoji, a US and Czech-headquartered avatar startup that helps creators and brands express their virtual identity. In a moment of serendipity, Facemoji, which later rebranded to to Alter, was bought by Alphabet, the US-listed holding company behind search engine Google, on the same day Twitter completed its leveraged buyout by Musk. The deal was worth about $100m, a source told TechCrunch.
Also last October, Twitter took a minority investment of undisclosed size in US-based digital advertising services provider Aleph Group and a few weeks later in 7th Ave, the US-based owner of an online knowledge sharing platform for black professionals and students.
Earlier, in April 2021, India-based ShareChat raised $502m from investors including social media platforms Twitter, Snap and Tencent.
This was followed in February this year by Twitter backing Bitcoin payment app developer OpenNode’s $20m series A round at a $220m valuation.
Twitter has also been actively supporting VC firms. In June, US-based venture capital firm Hannah Grey had closed an oversubscribed fund backed by Twitter, a year after US-based venture capital firms Female Founders Fund and Ulu Ventures had closed their respective third funds including Twitter as limited partners.
Would “the bird” have been freed by Musk if Twitter had been more aggressive earlier in its life as a CVC? It is hard to say, but Touchdown’s analysis suggests that companies with active CVC units tend to see higher growth in their stock price over time. Had Twitter gone down this route, it might have been more worthwhile for it to remain a public company.