Or there is a deal on the way with google/facebook/whatever for their user/gif database and/or search engine? Maybe they have some insane R&D going on that I am not aware of?
When I see startups without any proper business model on how to make money evaluated for insane prices ..ahem twtr ahem.. and burning mountain loads of money - it makes my blood boil.
As to how the $72MM (and the 12%) is calculated, that's a negotiation between parties, and there is no universally accepted "formula" for calculating this. Private equity and VC companies take risks based on their evaluation of the company prospects. If there were a magic formula, then investing in companies (and finding funding) would not be at all interesting or competitive.
Aside from any any numbers about user adoption, growth rate, or potential advertising angles, the other significant thing that an investor may be looking for is the chances of a downstream acquisition by a player looking to expand its reach. Giphy would be a natural target for large search companies, or social media companies (who might be interested in a closer relationship with an effective content source), or various chat companies (like Slack or Facebook or even Apple).
Whether an acquiring company will be willing to pay enough money for a company like this to be worth the investment, rather than building similar functionality in-house, is part of the judgment of the investors, which they can base on qualitative evaluations of the technical or sales abilities of the employees or the difficulty of the problem space.
MySpace vs. Lehman Brothers
Bebo vs. Lehman Brothers
Friendster vs. Lehman Brothers etc
DB is running close to defaulting on its debts.
It's too big to fail though and the tax payers will save it.
If you think the market is pricing DB incorrectly, and also the market is pricing Snapchat incorrectly... are these really counterexamples of each other then?
At least a 2x liquidation preference is standard for most VC investments (Y Combinator is an exception to this, I think). In simplified form, this means that regardless of what happens, the investors will get 2x of what they invested before anyone else in the company sees a cent. This means that even if giphy fails, the investors will always get a 2x return on their investment unless the company falls so far that it's no longer worth $24 million when it's sold off somehow.
EDIT: After being informed in responses to this, it appears that 1x preferences are now the standard. I apologize for any misinformation.
So companies put together a pitch with current revenue streams, how to grow those, and R&D for new revenue streams, and how to do so while keeping expenses low. Those numbers are usually multiplied by some factor to determine a ballpark.
Exit strategies are also considered. The goal is usually either to get acquired or go public. Marketability of a company once properly positioned, current market climate, and past exits of similar companies are also often considered. For example, Google bought YouTube for $1.65B less than two years after launch while it was still pretty rough around the edges. Gifs are already often used as lightweight, embedded video alternatives on Reddit and blogs, so it's not inconceivable that Giphy tries to make a case for being worth a similar amount if they can position themselves as a new de facto media platform for light clips like YouTube is for full videos.
Any site like Giphy that can position themselves
as the leader in a segment of the web like gif
searching/aggregation
People said the same thing of snapchat, facebook, and twitter early on.