This is not how startup investing works. No one would buy Stacker News for 25M$ today. Investors are betting on @k00b's vision to build a Reddit competitor. If he is successful, they are potentially looking at 10% of a multibillion-dollar company, a pretty good payout. If it fails, they are collectively down 1.25M$. There's not much in between, so the current valuation number isn't all that critical.

Also, many people get funded for a vision before they even have a prototype so a 25M$ valuation isn't unusually high. The valuation is not based on what @k00b has built so far but on what @k00b plans to build.