- Perplexity, an AI search engine startup, is reportedly in the midst of raising over $250 million at a valuation ranging from $2.5 billion to $3 billion.
- This fundraising surge follows two recent rounds where Perplexity’s valuation surged: in January, raising nearly $74 million at a $540 million valuation, and in March, securing funding at a $1 billion valuation.
- The new round aims to capitalise on the company’s growing market traction and could see participation from existing investors like NEA and IVP.
Perplexity, a rising star in the AI search engine arena, is garnering significant investor interest with its innovative approach to generative AI. New Enterprise Associates (NEA) and IVP, both previous backers of the company, are among those looking to invest in this larger round, according to sources.
Perplexity’ advanced generative AI technology
Perplexity’s core offering revolves around a sophisticated generative AI-based search engine, distinguished by its chatbot-style interface.
Leveraging a blend of cutting-edge large language models (LLMs), Perplexity aims to deliver more accurate and nuanced search results compared to traditional search engines like Google and Microsoft Bing.
“Unlike other enterprise tools for knowledge work like Microsoft Copilot, Perplexity Enterprise Pro is also the only enterprise AI offering that offers all the cutting-edge foundation models in the market in one single product: OpenAI GPT-4, Anthropic Claude Opus, Mistral, and more to come,” CEO and co-founder Aravind Srinivas noted in a post promoting the new offering. “This gives customers and users choices to explore and customise their experience depending on their use cases.” That “more to come” may well be including more from Hugging Face and Meta, if Srinivas’s public endorsements and investor lists are anything to go by.
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Rapid growth and industry impact
Despite its relatively short lifespan since its inception in 2022, Perplexity has amassed a formidable list of investors, with renowned VCs, strategic partners, and prominent individuals backing its vision, including IVP, NEA, Nvidia, Databricks and individuals such as Meta’s chief AI scientist Yann LeCun and Clément Delangue from Hugging Face.
Perplexity’s strategic focus on enterprise solutions sets it apart in the AI landscape, with its “Pro” product catering to the specialised needs of businesses.
By offering both free and paid tiers, Perplexity aims to capture a wide market segment while maintaining a robust revenue stream, with impressive annual recurring revenue (ARR) figures indicating strong customer adoption.
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Navigating challenges in AI development
As Perplexity continues to expand its AI capabilities, it faces challenges inherent in developing and scaling AI services, notably the high computational costs associated with AI model training.
“Compute is very expensive, so they may need to raise” for that reason alone, one investor said.
Nevertheless, the company’s ambitious fundraising efforts underscore its commitment to overcoming these obstacles and solidifying its position as a leader in AI-powered search technology.
