Perplexity AI nears $500 million funding round, valued at $9 billion

Perplexity AI, the artificial intelligence-driven search engine startup, is on the verge of securing $500 million in new funding, which will boost its valuation to $9 billion, according to a source familiar with the matter as detailed in a report by CNBC.

The company, which has grown rapidly this year, is competing against major players like Google and OpenAI, the creator of ChatGPT.

Earlier in 2023, Perplexity was valued at just $3 billion, but the surge in investor interest driven by the generative AI boom has led to a significant increase in its worth. This new funding round, which is being led by Institutional Venture Partners (IVP), will be one of the company's largest to date

IVP is a prominent Bay Area-based venture capital firm. The round is still in progress, and the deal has not yet been made public, the CNBC report explained further.

Perplexity has experienced explosive growth

Perplexity started the year with a modest $500 million valuation, but with four funding rounds this year alone, the company has experienced explosive growth. The startup’s search engine is gaining traction, attracting millions of users and handling over 230 million queries per month, with a marked increase in US users. Perplexity has also amassed over 2 million app downloads, signalling strong demand for its services.

Despite its success, the company has faced some controversy. In September, The New York Times sent Perplexity a cease-and-desist letter accusing the startup of scraping content from its website. Perplexity denied the allegations but is grappling with ongoing scrutiny over its content sourcing.

To address concerns from content providers, Perplexity launched a revenue-sharing program in July. This initiative allows publishers to earn a portion of ad revenue generated when their articles are cited in the AI-generated answers. Media outlets such as Fortune, Time, and The Texas Tribune have signed up for the program, which Perplexity hopes will eventually attract 30 publishers by year-end.

Competition in AI-driven search continues to heat up

This new funding comes as the competitive landscape in artificial intelligence (AI) search heats up. Just last week, OpenAI introduced a search feature in ChatGPT, which includes real-time web search capabilities, further intensifying competition with Perplexity. Despite the challenges, Perplexity’s ability to grow rapidly in a short period underscores its potential as a major player in the AI search space.