Perplexity AI, a startup specializing in AI-powered search technology, is aiming to double its valuation to over $8 billion through a new funding round. The company is seeking to raise approximately $500 million in this round. In July alone, Perplexity's search engine handled around 250 million queries, compared to 500 million for the entire year of 2023. Recent sales estimates indicate that the company generates about $50 million in annual revenue.
Over the past year, Perplexity has completed three funding rounds, with the most recent in May, which saw its valuation soar from $1 billion to $3 billion. This round included investment from SoftBank's Vision Fund 2. If the new funding terms are agreed upon, Perplexity's valuation would more than double compared to its $3 billion valuation from May's SoftBank deal. Although Perplexity has declined to comment on the fundraising efforts, insiders have confirmed the company's plans.
Perplexity, supported by Nvidia, builds its search engine using large language models (LLMs) such as OpenAI's ChatGPT and Meta's Llama, aiming to challenge Google's dominance in search. Even though the company does not possess its own AI model, it has shifted from a subscription model to an ad-based revenue model similar to Google's approach.
Despite rapid growth, Perplexity AI faces copyright concerns, with some news publishers accusing it of unauthorized web content scraping. The New York Times has even issued a cease-and-desist letter. CEO Aravind Srinivas expressed a desire to collaborate with publishers and emphasized that the company does not intend to antagonize anyone.
Meanwhile, OpenAI, another major player in the AI sector, recently raised $6.6 billion at a valuation of $157 billion. OpenAI's tools, such as ChatGPT, continue to blur the lines between chatbots and search engines, further entering the search market with SearchGPT.
