Perplexity, the AI search engine platform, is reportedly finalizing the details of a new funding round that will boost its valuation to a staggering $9 billion. This would triple its valuation from just a few months ago. The Wall Street Journal was the first to report on the new funding round.
The reported $500 million in new funding will be used to advance Perpelxity’s AI-powered search engine which competes with OpenAI’s ChatGPT, Microsoft Bing, and Google Search. The San Francisco-based venture capital firm Institutional Venture Partners is expected to lead the round. Some notable investors in Perplexity include NVIDIA and Jeff Bezos.
At the beginning of this year, Perplexity raised $74 million at a valuation of $520 million. Since then, the company has continued to attract investor interest amid the GenAI boom, raising four funding rounds so far this year. At the end of June, the company was valued at $3 billion. This latest funding round would now make Perplexity one of the most valuable GenAI startups in the world.
One of the reasons why Perplexity is attracting investors is its AI-driven approach to delivering clear and reliable answers in a conversational format. The user-friendly interface and efficient handling of complex queries have helped the startup quickly gain traction with both individual users and businesses seeking reliable AI-driven search solutions. The startup also prioritizes transparency, citing the information sources directly.
Perplexity’s search app has more than 2 million downloads to date. The startup claims that it handles about 230 million search queries each month. The annual revenue stands at about $50 million, according to the Journal.
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As Perpelexity’s platform is free to use, the startup makes money from its Pro subscriptions, which offer advanced features such as image generation capabilities. To diversify its revenue stream, the startup has introduced an enterprise-grade version of its search for businesses. The platform has plans to introduce advertising, though it hasn't rolled it out yet.
The report on Perplexity’s new funding comes at a time when OpenAI and Google clashed in the evolution of AI-powered search. The tech giants have integrated AI and search with the aim of delivering real-time and more personalized information for users. While Google fields the overwhelming majority of the search traffic worldwide, the emergence of AI-powered search could level the playing field.
The rapid growth of Perplexity is not without its share of controversy. Last month, the New York Times sent a cease-and-desist letter to Perplexity demanding the startup to stop crawling its newspaper’s content for GenAI purposes. Perplexity has denied the allegations by responding that “no one organization owns the copyright over facts” and defending what it says is “indexing web pages and surfacing factual content.”
Perplexity states that it is open to collaborating with all publishers, including the Times, through a revenue-sharing model. Under this arrangement, publishers would receive a share of the revenue based on the number of links used in Perplexity’s responses.
This program has been received well by several publishers, including Fortune, TIME, Entrepreneur, and The Texas Tribune. However, some major outlets continue to express concerns over content scraping and intellectual property protection, which has led to legal disputes.
Forbes and Wired.com have raised allegations of plagiarism against Perplexity, accusing the startup of improperly using their content. Meanwhile, the Journal's parent company, Dow Jones, has escalated the situation by filing a lawsuit, challenging Perplexity's practices in court.
