Twitter, the wildly popular microblogging service with no business model, may be forced to charge companies for access to its users, founder Evan Williams told Bloomberg News. Williams, who recently
replaced Jack Dorsey as CEO, said he wanted to start weaning the company off venture capital, especially as the economic climate sours. He pointed out that as the value of Web startups falls,
investors are starting to ask for bigger stakes in return for funding. "The VCs have the money, but they'll just negotiate harder," said Williams. "I want to manage things so I don't have to raise
money in 2009.'' Williams sold the blogging service Blogger to Google in 2003.
According to Michael Patrick, a partner at the law firm Fenwick & West, startup valuations have fallen at least
20% in the past year. Bloomberg noted that the fall in valuations comes at a time when many young Silicon Valley firms need to raise more capital just to survive.
VCs, meanwhile "are getting
pickier about where they invest", because they, too are having more trouble raising capital than in the past. VCs depend on banks, university endowments and individuals for capital. Banks are just
starting to scale back their lending, says Larry Allen, managing director of Nyppex Holdings LLC, a company that brokers stakes in venture funds. "The next group will be the endowments and
foundations. They're bedrock investors in this industry.''
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