Perplexity AI is in discussions to secure between $500 million and $1 billion in funding, which would value the artificial intelligence startup at $18 billion post-money, according to a source familiar with the situation who spoke to CNBC.
This new funding would effectively double the startup’s most recent valuation of $9 billion from December, after it achieved a threefold increase from its $3 billion valuation in June 2024. Perplexity AI currently reports nearly $100 million in annual recurring revenue (ARR), as noted by the anonymous source.
Operating in the competitive AI search market, Perplexity AI faces challenges from major players like Google and Microsoft-backed OpenAI. The generative AI boom, initiated with the launch of OpenAI’s ChatGPT in late 2022, has intensified competition for Perplexity. Recently, Anthropic introduced its web search product, enabling its chatbot Claude to provide real-time search results to selected users. Furthermore, OpenAI has integrated a search feature into ChatGPT and Google has launched AI Overviews within its search product, though this feature faced backlash due to significant errors following its release.
Bloomberg first reported on Perplexity’s current funding endeavors. Additionally, CNBC highlighted last month that Perplexity was nearing the completion of a $50 million venture fund aimed at early-stage AI startups. The company plans to be an anchor investor in this fund, with most of the investment coming from outside limited partners.
Perplexity sees a strategic advantage in its investment initiatives, leveraging a network of approximately 80,000 developers. This extensive network allows the startup to track usage patterns of its application programming interface (API) and identify the most active users, according to a source who spoke to CNBC. The company’s founders and investors will also contribute to the fund, with a portion of the commitment being in stock.
Perplexity made a bid in January to merge with TikTok, coinciding with ongoing uncertainties regarding the social media platform’s future in the U.S.
Despite the thriving AI landscape, Perplexity has come under scrutiny due to allegations of plagiarizing content from media outlets. In response to these concerns, Perplexity initiated a revenue-sharing model for publishers in July, allowing them to receive a percentage of the ad revenue generated when users ask questions that reference their articles.
Featured image credit: Perplexity
