As soon as Twitter filed its paperwork to go public, reporters scrambled to make sense of it all. Two bits of news circulated about Twitter’s investors that weren’t true.
The truth is buried here, in a deep dive about Twitter’s history and founding.
1. A man named Peter Fenton does not own 6.7% of Twitter. But his firm, Benchmark Capital, does. Fenton’s name was listed on the paperwork because he’s a director of the firm and, as a Twitter board member, he’s also considered an “insider.” That does not mean he will personally pocket all the money from his firm’s stake in Twitter, which the paperwork seems to suggest.
2. Benchmark Capital does not own the second-largest outside position in Twitter, even though the initial S-1 filing made it look like it does.
Twitter was required to list every major shareholder in its company, which means any person or entity that owns 5% or more of Twitter. In the initial S-1, there were a number of people and firms listed, like Jack Dorsey and Peter Fenton, with shares that exceeded 5%. Then there was a section that listed 5% shareholders. There, firms like Rizvi Traverse, Spark Capital and Union Square Ventures were listed. Those firms all own more than 5% of Twitter. The revised S-1 makes that more clear.
The largest outside position in Twitter belongs to Rizvi Traverse, which acquired shares later from early investors who sold some to it on secondary markets, like USV, Spark Capital and even co-founder Evan Williams. Rizvi Traverse now owns nearly 18% of Twitter.
Next, J.P. Morgan and its affiliates own 10.3% of Twitter. Spark Capital owns the next largest outside stake, with 6.8% of Twitter, followed by Benchmark then Union Square Ventures, which owns 5.9%.
Here’s what the initial S-1 looked like, which caused some confusion:
Here’s what the revised paperwork looks like: