At the beginning of 2024, San Francisco startup Perplexity AI was valued at just over $500 million. Less than a year later, it’s now worth a staggering $9 billion, as deep-pocketed investors and rivals like Google (GOOGL) and OpenAI continue to hedge against the prospect of AI-powered search.
Perplexity, known for its artificial intelligence “answer engine,” received its latest valuation after completing a $500 million round of funding led by Institutional Venture Partners, first reported by the Financial Times. This round of financing was participated by Nvidia, New Enterprise Associates and B Capital. Bewilderment declined The Observer’s request for comment.
The startup has tripled its valuation since June, when it raised a round of funding from SoftBank’s (SFTBF) Vision Fund 2. Founder Andrej Karpathy is also one of Perplexity’s supporters.
As Perplexity’s valuation soared, so did its users. Unlike a search engine that provides links in response to search queries. Perplexity’s answer engine is designed to answer users’ specific questions by quoting and summarizing information from the web. According to a recent X post by Perplexity co-founder and CEO Aravind Srinivas, while the product was handling around 2.5 million queries per day in early 2024, that number has since risen to 20 million. The company had about 15 million active users as of March and has reportedly doubled its projected 2025 revenue to $127 million.
Srinivas co-founded Perplexity in 2022 after spending a year as a research scientist at OpenAI and numerous internships at OpenAI, Google DeepMind, and Google. Originally from India, he studied electrical engineering at the Indian Institute of Technology Madras and then received his Ph.D. in Computer Science from the University of California, Berkeley, in 2021.
Perplexity’s growth year hasn’t been without controversy. The startup has previously been in trouble for allegedly exposing copyrighted material through its search engine without citation. The company later launched a revenue-sharing publisher program that has attracted partnerships with publications including Time, Fortune and Der Spiegel.
Perplexity also uses acquisitions to grow its business. Yesterday (December 18) the company announced plans to acquire search engine manufacturer Carbon. This will be Perplexity’s second acquisition, following last year’s acquisition of Spellwise, which develops artificial intelligence keyboard applications. The acquisition will strengthen Perplexity’s position in the artificial intelligence enterprise search market by enhancing its ability to mine work documents from applications such as Google Docs.
“Instead of users searching across many different web pages, apps and messages to find the answers they are looking for, we see a future where Perplexity does the research for you,” the company said in a statement.
