Perplexity AI Secures $73.6M in Series B, Raises Valuation to $520M

Recently concluding a substantial Series B funding round, Perplexity AI, a San Francisco-based startup specializing in search engines propelled by artificial intelligence, raised $73.6 million.

Institutional Venture Partners (IVP) oversaw the funding round, which various venture capitalists and tech luminaries, including Jeff Bezos, NVIDIA, and others, attended.

The financing campaign was a resounding success, increasing the total capital raised by Perplexity AI to $100 million and elevating its valuation to $520 million.

Since its establishment less than two years ago, the organization has experienced exponential growth in prominence, amassing more than half a billion queries in 2023 and garnering 10 million monthly active users.

The expansion can be attributed, in part, to its distinctive search methodology, which entails providing immediate responses to inquiries via natural language processing instead of merely displaying a compilation of hyperlinks.

Perplexity incorporates prominent AI models such as Claude 2 and GPT-4 into its search index to produce concise responses accompanied by citations.

This feature provides users with a conversational flow and enables them to pose further inquiries.

Notwithstanding its remarkable expansion, Perplexity AI is unprofitable, generating annual revenue in the single-digit millions.

Nonetheless, the platform does generate income via its Pro tier, accessible for a monthly fee of $20 and providing access to enhanced AI models and image generation functionalities, among other advanced features.

However, the primary search experience is accessible to all users without associated costs.

According to Aravind Srinivas, the CEO of Perplexity AI and a former employee of DeepMind, Google, and OpenAI, the organization is distinguished by its concentration and capability to refine a diverse range of high-performing AI models.

The user posits that Perplexity AI will revolutionize how individuals retrieve online information.

The company’s foray into the domains of search and generative AI is consistent with the overarching trend observed in the industry, wherein prominent technology firms such as Microsoft and Google are shifting their focus towards interfaces that prioritize AI for their search products.

By 2030, the generative AI industry, of which Perplexity AI is a component, could be worth as much as $667 billion.

Perplexity AI encounters the obstacle of contending with market titans such as Google. However, the company’s recent financing success and innovative strategy establish it as a prospective disruptor in AI-driven search engines.