Perplexity is reportedly seeking more than $250 million for its AI search platform, valued between $2.5 billion and $3 billion.Â
The AI search engine startup Perplexity.ai is currently in demand. According to information obtained by TechCrunch, the business is presently seeking at least $250 million more at a valuation of between $2.5 and $3 billion.
The announcement follows two more significant fundraises that saw the company’s valuation soar throughout the previous four months: At a $540 million valuation in January, the company raised around $74 million (up from $121 million in April 2023). Additionally, the company closed funding at the beginning of March at a $1 billion valuation. Today, CEO Aravind Srinivas clarified on Twitter that the actual amount raised was approximately $63 million.
The narrative goes beyond those two rounds that were mentioned. According to several people with direct knowledge of the business, Perplexity ai is planning to raise a minimum of $250 million in additional funding in order to take advantage of the market attention it is receiving. NEA and IVP, two of the company’s prior backers, are reportedly interested in contributing to this larger amount of funding.
According to a source, Perplexity may decide to collaborate with current investors instead of diversifying and raising its capital table to attract new ones, which could affect their participation as well as that of other prior supporters.
According to a partner from an existing investment, “they are growing very rapidly.” “Yes, we’ll try to take part,”
A chatbot-style interface powers the generative AI-powered search engine at the heart of Perplexity’s offering. That is essentially how many people use products like ChatGPT and Microsoft’s Bing (powered by OpenAI), and Google is making a big push to improve search results with its Gemini LLM. Other generative AI companies are also targeting the search opportunity.
However, Perplexity is integrating other LLMs into its algorithms to provide a more accurate and comprehensive response.
It is currently utilizing these to create an allegedly more sophisticated enterprise “pro” offering.
“Perplexity Enterprise Pro is the only enterprise AI offering that provides all of the state-of-the-art foundation models available in the market in a single product, in contrast to other enterprise tools for knowledge work like Microsoft Copilot: In a tweet touting the new service earlier today, CEO and co-founder Aravind Srinivas said, “OpenAI GPT-4, Anthropic Claude Opus, Mistral, and more to come.” Customers and users now have options to explore and tailor their experience based on their use cases. If Srinivas’s public endorsements and investor lists are any indication, that “more to come” might very well include more from Hugging Face and Meta.
According to PitchBook data, Perplexity currently has 46 names on its investor list, which is quite long, given that the firm was founded only in 2022.
Apart from NEA and IVP, it also includes strategic backers like Nvidia, Databricks, and Bezos Expeditions; prominent VCs like Sequoia, Bessemer, and Kindred; and well-known individuals like Jeff Bezos, Yann LeCun, the chief AI scientist at Meta, Naval Ravikant, Susan Wojcicki, Elad Gil, Nat Friedman, and Clément Delangue from Hugging Face. The $56 million round from March was led by a newer supporter, Daniel Gross, with participation from Y Combinator CEO Garry Tan, Figma’s CEO Dylan Field, and other new backers Stanley Druckenmiller and others.
The quick succession of fundraisers is similar to the rolling fundraising that other large startups have demonstrated over the years. Snap frequently gave the impression that it was continuously raising money in the years preceding its first public offering (IPO), a period of significant attention and rapid expansion. These days, AI seems to be the main focus, as seen by the explosive growth and skyrocketing values of firms like OpenAI, Anthropic, and Mistral.
Perplexity is an innovative startup that is making waves in the industry for two reasons. It is, above all, one of the more modest but no less ambitious contenders in the battle to develop generative AI services. Because it isn’t preoccupied with the competition to create broad, multipurpose language models, it has a unique place in the market. Instead, it is focusing on one particular product, at least for the time being: search, taking a cue from one of the largest Internet businesses in the world today.
Not all AI startups, like Perplexity, are focusing on enterprise clients and narrowly focused chances for growth. Using AI video technologies specifically targeted at the commercial sector, Synthesia, based in the United Kingdom, is approaching the creation of training and customer service videos in a similar manner.
Perplexity is a firm that provides its products on both free and enterprise-paid levels. As of right now, Bloomberg reports that Perplexity has handled 75 million queries this year and has an ARR of $20 million.
Why is it rising again so quickly? Yes, possibly to take advantage of investor and customer enthusiasm during what one investor called the startup’s “zeitgeist moment.” Additionally, due to the current mechanics involved in developing any form of AI service.
One person stated, “Compute is very expensive, so they may need to raise” just for that reason.
We have contacted Srinivas for feedback, and we’ll update this article when we find out more.