AI Startup Perplexity Scores $1B+ Valuation
Perplexity AI, the barely two-year-old 55-person startup developing an AI-powered search engine to rival Google (Nasdaq: GOOG), has secured approximately $63 million in a new funding round, doubling its valuation to over $1 billion in just three months.
The round was led by investor Daniel Gross, with participation from notable figures like billionaire Stanley Druckenmiller, Y Combinator CEO Garry Tan, Figma CEO Dylan Field, and early backers such as Jeff Bezos and Nvidia.
Unlike Google enhancing search with AI models, Perplexity has built an entirely new “knowledge discovery” platform from scratch using AI. It combines web data with AI models to directly answer queries with relevant citations in a conversational manner, eliminating the need to click through links or ads.
With a focus on accuracy, the chatbot has quickly gained traction in the crowded AI market, attracting users like Nvidia CEO Jensen Huang, who claims to use the product “almost every day.” Perplexity, which offers free and paid versions, has processed nearly 75 million user queries in the US so far this year, surpassing the total from 2023.
The company reports generating $20 million in annual recurring revenue. Like many AI companies, it is now targeting enterprise customers, launching a new $40 per month enterprise version with enhanced security and data protection features. Major companies like Bridgewater Associates, Zoom Video Communications, and the Cleveland Cavaliers are among the early adopters.
“We want to get Perplexity in the hands of every single company in the United States,” said Aravind Srinivas, the company’s co-founder and CEO.
Except maybe Microsoft (Nasdaq: MSFT) employees as Business Insider reported last week that Microsoft has started blocking employee access to Perplexity, even if it’s one the largest customers of its Azure OpenAI service. Microsoft has not confirmed this move and it’s unclear when it started, if it’s temporary, and if the restriction applies to everyone in the company.
Meanwhile, Perplexity will also be expanding globally through partnerships with SoftBank in Japan and Deutsche Telekom in Germany, where it will offer a free one-year subscription a combined total of over 300 million users.
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