Perplexity AI, the emergent player in generative AI search engines, has successfully raised $70 million in a funding round led by IVP.
The funding round also saw additional investments from NEA, Databricks Ventures, former Twitter VP Elad Gil, Shopify CEO Tobi Lutke, ex-GitHub CEO Nat Friedman, Vercel founder Guillermo Rauch, and notably, Jeff Bezos.
Reports state that the funding has bolstered Perplexity AI to a post-money valuation of $520 million, a notable achievement for a company that has been operational since August 2022.
Founded by a team of engineers with backgrounds in AI, distributed systems, search engines, and databases, Perplexity AI has Aravind Srinivas as its CEO. Srinivas, a former researcher at OpenAI with expertise in language and generative AI models, has been of great impact in the company’s growth.
Perplexity AI differentiates itself from traditional search engines by offering a chatbot-like interface, enabling users to ask questions in natural language. The platform’s AI responds with comprehensive summaries containing source citations, allowing users to explore topics more deeply through follow-up queries.
Underpinning Perplexity’s offerings are a range of in-house and third-party generative AI models. The platform’s Pro plan, priced at $20 per month, provides subscribers with the flexibility to switch between models like Google’s Gemini, Mistra 7Bl, Anthropic’s Claude 2.1, and OpenAI’s GPT-4. This plan unlocks additional features such as image generation, personalized Copilot for searches, and file uploads, allowing users to analyze documents and images for relevant information.
Despite the impressive progress, there are concerns over the sustainability of generative AI search tools. Industry insiders point out the costs associated with running AI models, citing examples like OpenAI, which reportedly spent around $700,000 per day to meet ChatGPT demand.
Perplexity AI currently asserts an annual recurring revenue ranging between $5 million and $10 million. However, questions about the company’s longevity persist, with challenges such as potential misuse, misinformation, and copyright issues associated with web scraping practices for model training data.
Aravind Srinivas remains optimistic, highlighting Perplexity’s focus on delivering a superior search experience with advanced filtering and discovery options. The company is also branching into serving its own generative AI models through an API available to Pro customers.
With over $100 million raised to date and a reported ten million active monthly users, Perplexity AI is set to expand its 39-person team and enhance product functionality. Investors, including Jeff Bezos, continue to express confidence in the company’s vision, despite the uncertainties surrounding the future of generative AI and consumer search.
Cack Wilhelm, a general partner at IVP, emphasized the unique ability of Perplexity’s CEO to balance a grand long-term vision with relentless product development, positioning the company to tackle the fundamental challenges of search in the digital age.
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