In early 2024, San Francisco-based startup Perplexity AI was valued at just over $500 million. Less than a year later, it's now worth $9 billion, as serious investors and rivals like Google ( GOOGL ) and OpenAI continue to place their bets on the promise of AI-powered search.
Perplexity, best known for its AI “answer engine”, has received its new valuation after closing a 500 million round led by Institutional Venture Partners, the Financial Times first reported. The round was led by Nvidia, New Enterprise Associates and B Capital. Confusion declined requests for comment from the Observer.
The startup's valuation has tripled since June, when it raised a round from SoftBank (SFTBF)'s Vision Fund 2. Jeff Bezos of Amazon (AMZN) and OpenAI co-founder Andrej Karpathy are also among Perplexity's backers.
As Perplexity's value rises, so do its users. Unlike search engines that provide links in response to search queries. Perplexity's answer engine aims to answer specific user questions by summarizing information on the Internet with quotes. While the product processed an estimated 2.5 million daily queries in early 2024, this number has since increased to 20 million, according to a recent X post from Perplexity founder and CEO Aravind Srinivas. The company had about 15 million active users as of March and has reportedly doubled its projected revenue by 2025 to $127 million.
Srinivas founded Perplexity in 2022 after working for a year as a research scientist at OpenAI and a number of internships at OpenAI, Google DeepMind and Google. Originally from India, he studied electrical engineering at the Indian Institute of Technology, Madras before earning his Ph.D. in Computer Science at the University of California, Berkeley in 2021.
The booming years were not without controversy. The startup has been in hot water for allegedly using copyrighted material through a search engine without citation. The company then launched a publisher revenue sharing program that has already attracted partnerships with publications such as Time, Fortune and Der Spiegel.
Confusion also increases your business through acquisitions. Yesterday (Dec. 18) the company announced plans to acquire a Carbon Recovery engine manufacturer. It will be Perplexity's second acquisition following last year's purchase of Spellwise, which makes an AI-powered keyboard system. The acquisition will strengthen Perplexity's ability to tap into work files taken from apps like Google Docs, strengthening its position in the AI-enabled business search market.
“Instead of making users search through many different web pages, apps and messages to find the answer they're looking for, we see a future where Perplexity does the research for you,” the company said in an announcement.
