Home Investment in 3rd Party Twitter Startups Down 50%, Says Report

Investment in 3rd Party Twitter Startups Down 50%, Says Report

Although the number of registered Twitter users has grown to over 145 million, a report released yesterday by investment research firm CB Insights notes that that popularity hasn’t translated into investment in the Twitter ecosystem. According to its research, investment by venture capitalists and angel investors into pure play Twitter startups has dropped over 50% from June 2009 to May 2010.

“Pure play” startups are those whose product is predicated wholly on the Twitter platform.

From June 2008 to May 2009, CB Insights tracked $21.6 million in investment into pure-play Twitter startups. But over the last 12 month period, that investment figure is down to $10.4 million. While the dollar amount is down dramatically, the number of investment rounds has stayed nearly the same: 11 last year versus 10 this year.

Despite the growing popularity of Twitter, investors (and developers) appear to be uncertain about both the stability and the direction of Twitter. When Twitter purchased Tweetie back in April and acquired Smallthought Systems in June, it signalled to many that the company would be “filling the holes” in its platform itself, rather than leaving them for third-party developers to address.

While investment in and development of the Twitter ecosystem as a whole will continue, it seems unlikely that investment in pure play Twitter startups will rebound to meet the levels cited in another CB Insights report: the one that tracked a 220% increase in pure play iPhone and iPad app startups.

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