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Giphy Has Almost No Revenue But Is Worth $600 Million

October 31, 2016, 10:10 PM UTC
Courtesy of Giphy

Whether it’s on Twitter, Facebook, or in your company’s Slack inter-office chat threads, you’ve probably seen hundreds of them—animated GIFs of Donald Trump making faces, or of popular Internet “memes,” like the little girl doing the rock salute while four-wheel drifting in her toy Corvette.

These little mini-clips may be fun, but does that justify giving one of the companies that create them a market value of $600 million? By way of comparison, that’s more than twice what Amazon CEO Jeff Bezos paid for the Washington Post.

Giphy, which was created in 2013 as part of the New York-based venture fund/incubator Betaworks, got this valuation by raising a Series D funding round of $75 million from a series of venture capital investors. That doubled the amount the company has raised so far, and coincidentally also doubled its valuation to $600 million.

Corvette Drifting

If you’re wondering what Giphy’s valuation works out to as a multiple of revenue, the answer is that it’s almost infinite — because the company doesn’t really have any revenue to speak of.

So then why should this business be worth $600 million? Giphy and its investors argue that it is essentially a model for a new kind of media company. It creates bite-sized pieces of video that can go incredibly viral in a matter of minutes, whether it’s about the election campaign or a popular TV show.

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Last week, the company said it serves over one billion GIFs every day that are seen by 100 million people. Even if you see GIFs as a trivial form of amusement rather than serious media, those are some large numbers.

What the company has done with the funding it has raised so far is build what amounts to a new-media studio for the creation of 5-second or 10-second video clips. Giphy has partnerships with everyone from the Grammy Awards and Major League Baseball to CNN and Paramount Studios, and its teams can instantly generate GIFs of key moments that are perfect for sharing on dozens of different social platforms.

Robot milk server
Courtesy of Giphy

The implication is that because Giphy understands how this works for micro-form content, it will also be able to distribute micro-versions of advertising messages as well. “Almost all the content flowing through Giphy, there’s some branded element to it already,” chief operating officer Adam Leibsohn told the Wall Street Journal.

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Draper Fisher Jurvetson, which led the most recent funding round (a round that included Institutional Venture Partners and China Media Capital) is also optimistic about its chances. “We believe GIFs are emerging as a format that consumers love and will be really important to advertisers as well,” DFJ partner Barry Schuler told the Journal.

So maybe you should spend some time figuring out how to turn your own content into animated GIFs, because it sounds like investors and advertisers might be willing to pay for it. But how much they will pay remains to be seen.