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Twitter Debut Seen Setting Tone for Startup Valuations

There’s more at stake in Twitter Inc.’s initial public offering than just shares held by employees and investors. The performance will influence how Silicon Valley’s dealmakers value emerging Web startups.

Venture capitalists and entrepreneurs will view a robust Twitter debut as a positive sign for other consumer-Internet IPOs and the prices that startups can command in funding rounds. A drop in shares -- akin to the weakness that followed Facebook Inc.’s initial share sale in May 2012 -- could chill startup valuations and send venture capital investments downwards.