AI startups, and generative AI startups in particular, are blazing through VC cheques at breakneck speed — a recent report states that a staggering $56Bn has been invested in generative AI in past two years. The latest upstart expected to join this ever-growing list is Perplexity AI – which is in talks for a fresh fundraise, that may value the firm at $8Bn, reports WSJ.
If the talks go well, then the upcoming funding round would see the San Francisco-based startup raise nearly $500 million. This would skyrocket the firm’s valuation to around $8 billion, which is more than double its current worth of $3Bn, which it achieved earlier this year itself.
The company integrates conversational AI with real-time web search capabilities, aiming to provide a challenge to traditional search engines by creating a chatbot-like interface. The AI search engine provides answers to prompts with relevant citations and sources (making it a user-friendly alternative and ensuring that they can verify the legitimacy of the information). It takes a page out of ChatGPT’s book, rather than providing a simple list of links (like Google’s search engine does).
This development is sure to aid Perplexity in its competition with other AI-driven platforms, and comes at a time when AI firms are swiftly securing funds. The most notable is OpenAI’s recent infusion of capital, wherein the ChatGPT-maker raised a total of $6.6 billion and elevated its valuation to an astonishing $157 billion. OpenAI was the one to kickstart the current AI race, and its ChatGPT had over 200 million weekly active users (as of August, which is twice the number of users the chatbot boasted in November 2023).
For its part, Perplexity has carved a space for itself in the AI market ever since its inception two years ago. Today, it is backed by several high-profile entities, such as Amazon founder Jeff Bezos, SoftBank, and chipmaking giant Nvidia, and competes against other firms to gain a slice of the generative AI market. According to a report by The Wall Street Journal, Perplexity receives about 15 million queries on a daily basis, securing nearly $50 million in annualized revenue. This is a significant leap from just $10 million (which was recorded earlier this year, in March).
Still, Perplexity has been the subject of multiple controversies – major news organizations such as The New York Times, Forbes, and Wired have accused it of plagiarizing their content to generate AI responses, thus violating copyright laws. The New York Times even (reportedly) sent the company a “cease and desist” letter
While users can access the platform for free, Perplexity AI also offers premium subscriptions for more advanced features. The company also rolled out an enterprise solution, one that will enable business users to search internal databases and files to answer queries. Going forward, the company also aims to bring ads with its platform in order to open yet another steady stream of revenue. This could likely cause a disruption in Google’s dominance in search-based advertising, and comes even as Perplexity in talks with the likes of Nike and Marriott to explore ad formats such as “sponsored questions.”
