AI search startup Perplexity AI valued at more than $1 billion after new funding round

Founded less than two years ago, the startup stood out after notable industry members like Nvidia CEO Jensen Huang said that he used Perplexity “almost everyday.”

FILE PHOTO: Perplexity AI has raised $62.7 million in a new funding round pushing its valuation to more than $1 billion.  | Photo Credit: cueapi

On Tuesday, AI search engine startup, Perplexity AI has raised $62.7 million in a new funding round pushing its valuation to more than $1 billion. The investment was led by Daniel Gross, former head of AI at Y Combinator, with participation from new investors like Stanley Druckenmiller, present Y Combinator chief Garry Tan and Figma CEO Dylan Field. Existing investors such as Nvidia, Nat Friedman, Elad Gil and Amazon founder Jeff Bezos also participated in the round. 

Led by Aravind Srinivas, Perplexity AI has gained attention in the past few months driven by the Generative AI boom. In January this year, the startup raised around $74 million and closed another funding round of around $63 million in March post which its valuation was raised to $1 billion.

Positioning itself as a competitor of Google Search, the startup’s search engine provides results in a chatbot-like interface. It also lists citations for its answers, summaries the results and helps users refine their queries for better responses. 

Founded less than two years ago, the startup stood out after notable industry members like Nvidia CEO Jensen Huang said that he used Perplexity “almost everyday.” Just this year, Perplexity has processed almost 75 million queries just in the US compared to the same number in the whole of last year. 

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The startup has both free and paid versions of its service and is reportedly generating $20 million in annual recurring revenue. 

A report by Bloomberg has revealed that Perplexity now wants to boost its revenue by shifting focus to enterprises. The startup has announced a new enterprise version of its chatbot at $40 a month which will also have security capabilities and data protection measures. Businesses like Bridgewater Associates, Zoom Video Communications and professional basketball team Cleveland Cavaliers are all early clients. 

Meanwhile, at a recent all-hands meeting Google search boss, Prabhakar Raghavan warned employees that growth for the company in search wouldn’t be as easy in the future. A report by CNBC revealed that Raghavan told employees that “life is not going to be hunky-dory forever.” 

Referring to increasing competition from generative AI search and regulatory pressures, Raghavan said, “I think we can agree that things are not like they were 15-20 years ago, things have changed. If there’s a clear and present market reality, we need to switch faster, like the athletes switch faster.”