Phillips Innovations

Twitter has been valued at $1bn by a group of investors expected to announce a deal for $100m in funding as soon as today.

The potential investors include mutual fund giant T. Rowe Price, private equity firm Insight Venture Partners, and existing Twitter investors Spark Capital and Institutional Venture Partners, according to the Wall Street Journal.

Twitter's valuation indicates investors' confidence that the move to instant publishing online represents a long-term shift in how people use the web, according to analysts.

They also said the funding will win Twitter more time to develop a business model to give the micro-blogging service steady sources of revenue.

In its recent revision of terms and conditions, Twitter left the door open for targeted advertising on its service, indicating plans to develop ways of earning money this way.

The company said it maintains its right to distribute advertising and that the type and extent of its advertising is subject to change.

Financial interest

The fundraising will be Twitter's second this year and comes amid growing interest in the organisation from larger media, internet and telecoms companies, including Facebook.

In February, Twitter took $35m in funding from Benchmark Capital and Institutional Venture Partners, which put Twitter's value around $250m at the time.

Twitter's choice of financial investors over strategic partnerships could give it more flexibility in the future, according to the Financial Times.

Facebook strategy

The strategy contrasts with Facebook's decision to accept a $200m investment from Eastern European and Russian internet firm Digital Sky Technologies (DST).

The partnership with DST is thought to be strategic for Facebook's growth in Russia because of DST's government connections and experience in making money through social networking sites.

Facebook's partnership with DST could soon see the introduction of alternative sources of revenue to boost its income from advertising.