AI startup Perplexity in talks to raise capital, valuation doubled to US$8 billion

Perplexity, an AI search company, has recently begun discussions for fundraising, aiming to more than double its valuation to $8 billion or higher, according to reports from Reuters. In the race to capitalize on the surge of investment in AI, as highlighted by OpenAI’s recent funding efforts, Perplexity is making significant strides.

Over the past year, Perplexity has successfully completed three rounds of fundraising, an impressive feat by Silicon Valley standards. Back in January of this year, its valuation stood at $520 million, but by summer, it surged to $3 billion.

This rapid increase in funding presents a notable challenge for investors eager to engage with the burgeoning AI startup landscape. OpenAI recently concluded the largest funding round in Silicon Valley’s history, raising $6.6 billion, which propelled its valuation to $157 billion.

Insider sources indicate that Perplexity has informed potential investors of its intent to raise approximately $500 million in this upcoming round, although the terms may evolve and the fundraising is not guaranteed.

Recent sales data suggest that Perplexity is forecasting revenues of around $50 million for the next 12 months, a stark jump from its annualized revenue of just over $10 million reported in March of this year.

Founded two years ago with backing from Jeff Bezos, Perplexity offers a unique product that blends search engine capabilities with AI chat functionality. It provides users with the latest information on the web like Google, while also generating responses to queries similar to ChatGPT.

Perplexity currently generates revenue through consumer subscription services and has recently launched a business version aimed at helping companies search internal documents. The company plans to expand its revenue streams by introducing advertising soon.

As it stands, this consumer-focused search engine sees about 15 million queries per day. However, Perplexity has faced criticism from various online media outlets, accused of using their content without permission to generate AI search results. Notably, The New York Times has sent a cease-and-desist letter to Perplexity, demanding that it stop accessing its content.