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Perplexity, a synthetic intelligence-powered search engine, closed its fourth round of funding this 12 months, tripling its valuation to $9 billion to compete with offerings from Google and OpenAI.
The $500 million round was led by Institutional Venture Partners, based on two people accustomed to the deal. Previous investors have included SoftBank's Vision Fund 2, Nvidia and Amazon founder Jeff Bezos, in addition to several outstanding names from the AI industry reminiscent of OpenAI co-founder Andrej Karpathy and Meta's chief AI scientist Yann LeCun.
The San Francisco-based group has grown rapidly this 12 months and its product receives a whole bunch of tens of millions of requests every month. It has 15 million monthly energetic users, with the vast majority of traffic coming from the US.
The latest funding will help Perplexity compete with West Coast rivals in an increasingly fierce battle for engineers. “The talent war for AI is like never before,” said Ali Ghodsi, co-founder and chief executive of Databricks, the AI and data analytics company that announced a $10 billion fundraising round on Tuesday.
Perplexity seeks to leverage and improve on the search promoting system developed by Google, wherein marketers bid for a sponsored link to be placed in response to searches. It is in talks with major brands to check promoting on its platform.
In an indication of growing competition within the space, AI firms have recently targeted the search market by linking chatbots to the web. This week, OpenAI introduced web search to its popular ChatGPT product, while Anthropic's Claude can perform searches through a feature called Computer Usage.
Google and Microsoft, leaders within the $300 billion world of digital promoting, have also recently integrated large language models into their search offerings, powering AI chatbots and making results more conversational.
The latest round boosted Perplexity's valuation nine-fold year-to-date, one other sign of how hot startups developing latest AI tools can attract a whole bunch of tens of millions and even billions of dollars in investment.
Following OpenAI's $6.6 billion fundraising in October – certainly one of the biggest in Silicon Valley – an individual near the corporate said Perplexity was inundated with unsolicited interest from latest investors.
Led by former Google intern Aravind Srinivas, Perplexity raised $250 million this summer, along with previous funding rounds in January and April.
Perplexity makes money from subscriptions. It said annual sales – a forecast of full-year sales based on extrapolation of last month's sales – rose from $5 million in January to $35 million in August.
But the spate of deals for loss-making AI startups has raised concerns amongst some investors that rising valuations within the industry show all of the signs of a bubble. But even those that argue that the majority AI valuations are increasingly out of touch with reality are willing to bet on firms they imagine might be winners.
Perplexity declined to comment. IVP didn’t immediately reply to a request for comment. The closing of the round was first reported by Bloomberg.
