Giphy held talks to raise a massive new funding round

We’re hearing from a number of sources that Giphy, the big platform for hosting GIFs that also runs a GIF keyboard, held talks to raise a huge new financing round — though it’s not clear if it ever crossed the finish line.

Sources pegged the round at something as high as around $100 million, but that may have changed over time. We’ve been hearing about this for some time now, and whispers of this seem to have started a few months ago. As always, it’s possible that the talks may have changed over time. In the end, Giphy may have not have gone with financing at all, and for the time being, we’re hearing that nothing is imminent. Giphy last raised $72 million at a reported $600 million valuation at the end of 2016.

But the consumer investing environment isn’t necessarily dead, or even in purgatory, right now. HQ Trivia, for example, was able to raise $15 million at a $100 million valuation. This comes amid a time when the GIF space at large seems to be heating up. Given that the space seems to be growing quickly, it makes sense to try to raise additional capital in order to secure the right partnerships — and also get the right talent on board to optimize the experience so users are getting the right GIFs at the right moments and keep coming back to the platform over and over again. Given the growth, and that the business model isn’t fully fleshed out, it makes sense that Giphy could use some additional cash.

The apps in the space clearly have momentum. Giphy says it has 300 million daily active users — which, depending on who you ask in the Valley, could have a number of different interpretations. One of Giphy’s competitors, Tenor, points to searches on its platform as a success metric — saying that it hit 12 billion GIF searches in February. Gfycat, meanwhile, is positioning itself as a company geared around creator tools with mechanisms that optimize the fidelity of the inbound GIF, which also says it has around 130 million monthly active users. Gfycat raised $10 million in 2016, while Tenor (formerly Riffsy) raised $10 million in 2015.

It also presents a unique opportunity for all these platforms to start thinking about sponsored content. For example, if you open up a GIF search engine inside of a keyboard, one of these companies could plant a sponsored GIF right inside the search rail. Should it be sticky enough and hit the right sweet spot, it could get incredibly high share counts, and as a result offer a lot of reach for those companies looking to make GIFs.

This kind of branded content model is usually tied in with messaging, but GIFs could offer leagues more engagement than the average ad — which is what advertisers are looking for.

You’ll find a lot of Gfycat links around the internet, but some of the most fertile ground for these platforms exists within the various messenger platforms. Facebook Messenger, for example, uses these platforms more or less indiscriminately — switching between services relatively easily as it looks to just optimize the user experience and give them the best content. But for iMessage, for example, users install a specific keyboard. Neither of these apps are exactly blockbusters (nor should they be compared to apps like Facebook).

Here’s the Giphy app, where you can search for GIFs and copy them and such, for the last 90 days:

GIFs are increasingly popular, partly thanks to their ability to compress a ton of information into a short clip. This compression allows for punchy, memorable communication, which is great for messaging, but also great for ads.

While you could easily write out a text that tries to translate that information, searching for a GIF that translates not just the text but also the kind of subtext offers a ton of value. It’s thanks to that these platforms have risen to such prominence — both with Giphy’s own 300 million daily active user number and Tenor’s 12 billion monthly searches number. They take different approaches to measuring their success, but the point remains that this represents a pretty massive opportunity.

We reached out to Giphy several times for comment, but did not hear back. We’ll update the story when we hear back from them.