AI search startup Perplexity has raised $500 million in fresh funding led by Institutional Venture Partners, marking a striking surge in its valuation to $9 billion. The investment underscores the rapidly evolving landscape of AI-enhanced search technology and signals growing market appetite for alternatives to conventional search engines. The news on the funding round was first reported by Bloomberg.
Key Points:
- Perplexity’s valuation tripled from $3 billion in June to $9 billion in December.
- Perplexity acquired Carbon, a Seattle-based startup specializing in connecting AI systems to external data sources.
- Over 15 million active users reported as of March 2024.
The latest funding round caps off a transformative year for Perplexity, which began 2024 valued at $1 billion before securing backing from SoftBank's Vision Fund 2 in June. The company's acquisition of Carbon demonstrates its commitment to expanding beyond traditional search capabilities. "We believe your AI should be personal to you — at home, work, or on the go — and data connectivity is a key part of everyone's daily workflows," the Perplexity team stated in their announcement.
Carbon’s expertise in enabling AI systems to connect with external data will allow Perplexity to enhance enterprise offerings. This includes features for searching files and messages across platforms like Notion, Google Docs, and Slack. The Carbon team will fully integrate into Perplexity, with new functionalities expected to roll out in early 2025.
Beyond its core search tool, Perplexity offers enterprise solutions for internal file searches and finance-specific queries. These include stock price lookups and company earnings data. The company’s diversification into business-focused tools and the Carbon acquisition suggests a strategic push to capture both consumer and enterprise markets.
The investment and acquisition highlight the broader transformation happening in the search industry. While Google has dominated traditional search for decades, the emergence of AI-native platforms like Perplexity indicates that users and investors alike are ready for new approaches to information discovery.
Perplexity’s growth comes amid stiff competition. OpenAI recently expanded ChatGPT’s search capabilities to all users, while Microsoft and Google continue to integrate conversational AI into their platforms. Despite this, influential investors like Jeff Bezos and NVIDIA remain bullish on Perplexity’s vision to reshape information discovery.
The startup has also faced challenges, including accusations of plagiarism from news outlets. In response, Perplexity established revenue-sharing partnerships with publishers such as Time and Fortune. These measures have helped address content concerns while building a sustainable revenue model. However, legal disputes with major media titles, including The Wall Street Journal and New York Post, are ongoing.
The $9 billion valuation solidifies Perplexity AI’s position as a key player in the evolving search landscape. Whether it can sustain its momentum and outpace rivals remains to be seen, but its investors are clearly betting on its innovative approach to reimagining search.