A looped image of Kim Kardashian in tears could be worth some serious cash.
On Monday, Giphy (pronounced with a hard "g"), a search engine for looped images (a.k.a. GIFs) announced that it has raised a fresh $72 million in equity funding. The Series D round, led by investor Draper Fisher Jurvetson, brings the New York-based startup's total funding to about $150 million--for a reported valuation of $600 million. That's double what Giphy was worth when it last raised money in February.
"We believe GIFs are emerging as a format that consumers love and will be really important to advertisers as well," said Barry Schuler, a partner at Draper Fisher Jurvetson, in an interview with the Wall Street Journal.
Co-founders Alex Chung and Jace Cooke launched Giphy in 2013. Over the last three years, the company has served up more than half a trillion GIFs with references to movies, television, sports, politics, and more. It works with most major TV networks and sports leagues, as well as political groups like the GOP and DNC. It also generates promotional content for brands and licenses its API to other businesses for free.
Giphy has been growing at an incredibly rapid clip. Just last week, it surpassed 100 million in daily active users (all of whom are sending over 1 billion GIFs to one another each day). That figure would put its audience at around two-thirds the size of Snapchat, the social-media giant poised for an IPO in 2017. It's worth pointing out, however, that users often access Giphy via third-party apps, including Facebook Messenger, Tinder, Twitter, and Slack--in addition to its own website and app.
"With every major platform shift in media, there is a proliferation in new content formats," says Dennis Phelps, a general partner at Institutional Venture Partners, which also participated in the new funding round. "Giphy's explosive growth represents the tip of the iceberg with respect to how micro-content will inform and entertain consumers in the decades to come."
The $600 million valuation is impressive, given that Giphy has yet to generate any revenue. The company doesn't own its GIFs; some of these icons have been around since the early days of the internet. What's more, the company's content partnerships are not exclusive: It competes with other search engines, such as Tenor and Gfycat.
It's possible that Giphy plans to generate revenue through advertising, or by charging its brand partners to create promotional content. In a June interview with Inc., COO Adam Leibsohn compared the ultimate revenue model to search giants like Google.
Adam Leibsohn, COO of Giphy.
"Our core experience is search," said Leibsohn. "We're a search engine powering Facebook, Twitter, and Slack--with a lot more coming. If you look around the world, there are other search engines, and they make money in some pretty obvious ways."
And with Millennials spending some $200 billion every year, there's plenty of promise for brands hoping to attract younger audiences.
"If you think of GIFs as language--and language is just a series of thoughts and concepts--then you can make thoughts and concepts that adhere to your brand guidelines," Leibsohn continued. "The exposure is authentic. It's the marketing you could never buy."