george-zacharyWhen Twitter raised its most recent round of funding at $1 billion, a few players were conspicuously absent, including Union Square Ventures and Charles River Ventures.

Why did Charles River sit out? Size and strategy.

Charles River Ventures is focused on using a $325 million fund for early stage investments. Participating in a high-valuation round means too large a share of the fund goes to too few companies, said George Zachary (pictured), a partner at the firm.

The firm came in during the company’s second round of funding when Twitter was scarcely a verb — which Zachary added is generally a good omen for any venture investment. It was also when the service was highly controversial (another auspicious sign) because it provoked heated arguments over why anyone would ever want to constantly post their thoughts in 140-character bits.

Although Twitter’s leadership has been reticent about how it plans to monetize its fast-growing user base and can appear to lack a specific direction (as leaked documents showed earlier this year), that approach is well-suited for creating a community, said Saar Gur, another CRV partner.

“A lot of folks claim that Ev [Williams] and Biz [Stone] are not great managers but I would argue that they are perfect for the type of company that they are building,” Gur said. “The community wants them to win, they are telling them what to build and how to build it.”

That’s in contrast to Facebook, which Gur said is more “top-down” in designing and releasing features.

One other factor to consider in why the firm stayed on the sidelines is that Charles River Ventures is already riding a 40X return on its initial investment in Twitter, when the company was valued at $25 million. If they wanted to match that return through entering at a $1 billion valuation, Twitter would have to be worth at least $40 billion somewhere down the line.

Doable? We’ll leave that to you, fair reader, to decide.

Below is a funding table for Twitter from PE Data Center: