Perplexity AI secures $73.6M in Series B funding, boosts valuation to $520M

Perplexity AI, a San Francisco-based startup specializing in AI-powered search engines, recently completed a significant Series B funding round, raising $73.6 million.

The funding round was led by Institutional Venture Partners (IVP) and included a mix of venture capitalists and tech luminaries like Jeff Bezos, NVIDIA, and others.

The successful funding effort has brought Perplexity AI’s total raised capital to $100 million and boosted its valuation to $520 million.

Rapid growth

The company launched less than two years ago and has rapidly grown in popularity, attracting 10 million monthly active users and handling over half a billion queries in 2023 alone.

This growth is partly attributed to its unique approach to search, which involves delivering direct answers to queries using natural language processing rather than just presenting a list of links.

Perplexity integrates its search index with leading AI models like Claude 2 and GPT-4 to generate summarized responses with citations, offering a conversational flow and allowing users to ask follow-up questions.

Despite its impressive growth, Perplexity AI is not yet profitable, generating single-digit million revenue annually.

Revenue stream

However, it does generate revenue through its Pro offering, which costs $20 per month and unlocks advanced features like upgraded AI models and image generation capabilities. However, anyone can use the core search experience completely free of cost.

Perplexity AI’s CEO, Aravind Srinivas, who has experience working with organizations like DeepMind, Google, and OpenAI, believes that the company’s focus and ability to fine-tune a variety of top-performing AI models set it apart in the market. He envisions Perplexity AI as a next-generation tool that will redefine how people access information online.

The company’s entry into the search and generative AI spaces aligns with the broader industry trend, as major tech companies like Google and Microsoft pivot towards AI-first interfaces for their search products. The generative AI sector, which Perplexity AI is a part of, is expected to be worth as much as $667 billion by 2030.

While Perplexity AI faces the challenge of competing in a market dominated by giants like Google, its innovative approach and recent funding success position it as a potential disruptor in the field of AI-powered search engines.