Twitter's Success Prompts Investor to Sell

Rumors have the Kleiner Perkins Caufield & Byers (KPCB) venture capital firm, one of Twitter's investors, opting to sell its newly bought stock after Twitter doubled its market value after only three months.

KPCB was one of the many investors that participated in the $3.7 billion Twitter valuation last December.

The venture firm opted to sell some of its Twitter stock via secondary private markets, according to Henry Blodget, CEO and Editor-in-Chief of Business Insider's citing reliable sources with second-hand knowledge of the deal.

The most prominent reason for this move might be Twitter's market value of approximately $7 billion, almost double at what the company was selling last year.

Many look to Kleiner Perkins Caufield & Byers as one of Sillicon Valley's most influential investors, so a negative backlash toward Twitter is expected after the company confirms the rumor.

A recent study showed that Twitter usage is currently stalling, even if public awareness toward the social network is higher than ever.

This might be a reason for some to think that Twitter has plateaued, reaching its maximum potential. The Kleiner Perkins transaction might validate those theories.

Besides Twitter, the venture capital firm also holds stock with other web companies like Groupon, Google and Facebook, and was an early investor in successful companies like Amazon, Intuit, Segway, Sun, Compaq, Zynga and Electronic Arts.

KPCB's original investment in Twitter was around $150 million. It is not sure if the company sold the entire stock or just some shares to free some funds for new investments.

From a business point of view, this is a brilliant move since getting double your original money is pretty rare in such a slow financial market these days. Getting it in only three months can be considered a success.

Either way, Kleiner Perkins' move won't trigger a “falling chips” effect for Twitter, but will surely put the social network under the media's spotlight in future transactions.

Besides reporting the transaction, Henry Blodget also presents some unique points of view and even possibly illegal actions made by KPCB while involved with Twitter.