New York - Twitter co-founder Evan Williams is now a billionaire on paper, after the short-messaging website set a share price for its initial public offering (IPO) above a proposed range.
Williams, the largest individual shareholder, was due to own 10.4 percent of the San Francisco-based company after its market debut with a stake valued at $1.48 billion (R15.1bn). The shares were set to begin trading on the New York Stock Exchange yesterday.
Williams, who co-founded Twitter in 2006 out of his failed podcasting start-up Odeo, is among the biggest beneficiaries of the IPO.
Others include early backers such as Rizvi Traverse Management, which holds almost 16 percent valued at $2.21bn. The insiders have 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.
Twitter has raised more than $700 million in private capital. It planned to sell $1.82bn of stock in the IPO, the biggest US technology offering since Facebook’s debut last year.
The microblogging network priced 70 million shares at $26 on Wednesday evening, above the targeted range of $23 to $25, which had been raised once before. At the IPO price, Twitter is being valued at $14.2bn.
Jack Dorsey, a Twitter co-founder who became a billionaire this year from his stake in payments company Square, will add $609.8m to his fortune. Union Square Ventures, which contributed a few million dollars in Twitter’s first investment round in 2007, has a stake of 5.1 percent, worth $723.8m.
Spark Capital, which invested in the company in 2008, will own about 6 percent of its shares, worth $842.8m. Benchmark, which led a $35m investment in Twitter in 2009, bought another $9.1m in shares in 2011. Its stake is worth $820.7m.
Twitter’s executives and directors will not be able to sell their stock for 180 days, a standard lock-up period. Some non-executive employees may be eligible to sell almost 10 million shares as soon as February 15, the prospectus shows.
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 is down 50 percent from its 2011 IPO price, while Zynga has declined 63 percent.
Twitter, which posted a loss of $64.6m in its latest quarter, is not projected to report a profit until 2015, according to analysts’ estimates.
Facebook’s debut last year created 850 new millionaires, many of whom invested their wealth in emerging technology companies such as Instagram, Spotify and Flipboard.
Facebook raised $16bn, valuing the social network at $104bn 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. – Bloomberg