The global search engine market, long dominated by tech giants like Google and Microsoft’s Bing, is experiencing a seismic shift with the advent of AI technologies.
This transformation is not only changing how users interact with search engines but is also attracting significant investment into innovative startups.
The rise of Gen AI, capable of producing human-like text and responses, has further accelerated this trend, creating new opportunities and challenges in the digital information landscape.
Against this backdrop, a California-based startup has emerged as a potential disruptor, attracting substantial funding and attention from investors worldwide.
Perplexity AI, a startup specialising in AI-driven search technology, is reportedly on the verge of securing US$500m in a new investment round, according to Reuters.
Rapid growth and technological innovation
This financial injection could elevate the Perplexity’s valuation to US$9bn, marking a remarkable ascent from its US$520m valuation at the beginning of 2024.
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Perplexity AI is set to be valued at US$9 billion
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The funding round is expected to be led by Institutional Venture Partners (IVP)
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Perplexity has experienced rapid growth, with its valuation reaching US$3bn by mid-2024
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Perplexity’s app has been downloaded more than 2 million times
The funding round is expected to be led by Institutional Venture Partners (IVP), a venture capital firm that has previously invested in Perplexity AI.
IVP also spearheaded the company’s Series B funding round in January 2024, which raised US$73.6m and valued Perplexity at approximately US$520m.
Overall, Perplexity has experienced exponential growth throughout 2024.
By mid-year, its valuation had already reached US$3bn, reflecting the increasing interest in its AI-powered search capabilities.
The company’s platform, described as the world’s ‘first fully functional conversational answer engine’, aims to provide users with instant, reliable answers to complex queries, complete with sources and citations.
Perplexity additionally handled about 350 million queries in September 2024, a significant increase from the 500 million queries processed during the entire previous year.
Perplexity challenges and controversies
Despite its rapid ascent, Perplexity has faced challenges, particularly in the realm of content usage and copyright.
The company has been embroiled in legal disputes with major publishers, including the Wall Street Journal, over allegations of unauthorised use of copyrighted content in its AI-driven search results.
In response to these concerns, Perplexity has introduced a revenue-sharing model with news publishers, a move that sets it apart from other generative AI platforms.
This initiative aims to address the contentious issue of content usage while potentially creating a new paradigm for collaboration between AI companies and content creators.
Future prospects and industry impact
This development comes at a time when the AI industry is witnessing unprecedented growth and investment.
For instance, companies like OpenAI have demonstrated the immense potential of large language models, which require substantial financial backing.
Recently, OpenAI concluded a funding round at US$6.6bn, potentially valuing the enterprise at US$157bn.
This round drew significant participation from existing supporters like Thrive Capital and Khosla Ventures, along with major corporate partners Microsoft and NVIDIA.
Yet as Perplexity approaches its potential US$9bn valuation, the company’s future trajectory and its impact on the search engine industry remain subjects of keen interest.
The company’s ability to attract substantial investments in quick succession underscores the perceived value of its technology and its potential to disrupt the traditional search market.
Aravind Srinivas, the Chief Executive Officer and Founder of Perplexity, has laid out a vision for Perplexity’s future to make advertising revenue a part of their revenue model along with the pro versions.
For example, Perplexity has held discussions with some top brands including Nike and Marriott aiming to launch the new system by year’s end, targeting “premium” brands.
“Ads are really useful when they are relevant and coming from brands that are high quality, and a lot of people make purchases based on that,” says Aravind.
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https://technologymagazine.com/articles/from-500m-to-9bn-charting-perplexitys-soaring-valuation
