Perplexity Raises $73 Million Series B Round

Perplexity Raises $73 Million Series B Round
(left) Aravind Srinivas, Denis Yarats and Johnny Ho (right), co-founders of the startup Perplexity, in San Francisco. Image Credit: WSJ

San Francisco-based startup Perplexity AI has raised $73.6 million in a Series B funding round to support its mission of transforming how people access information online. The funding round was led by Institutional Venture Partners (IVP) and supported by a mix of venture capitalists and tech luminaries like Jeff Bezos, NVIDIA, and others.

Launched less than two years ago, Perplexity has already attracted 10 million monthly active users to its AI-powered search engine and handled more than half a billion queries in 2023 alone. This surge in popularity is reflected in the widespread adoption of its mobile apps on both iOS and Android platforms.

Perplexity stands out with its unique approach to search. Rather than returning a list of links like traditional search engines, Perplexity delivers direct answers to search queries using natural language processing, eliminating the need to dig through multiple webpages.

The platform integrates its own search index with leading AI models such as Claude 2 and GPT-4 to generate summarized responses with included citations. Users can engage in a conversational flow by asking follow-up questions to dive deeper on any topic.

While still dwarfed by Google's billions of daily search users, Perplexity is capitalizing on growing excitement around AI's potential to enhance accessibility to reliable information. Its rapid user growth has occurred almost entirely through word-of-mouth without dedicated marketing spends.

The startup is not yet profitable, but generates revenue through its Pro offering which costs $20 per month and unlocks advanced features like upgraded AI models, unlimited use of its Copilot research assistant, and image generation capabilities. However, the core search experience remains free.

Now valued at $520 million, this new injection of funds will fuel Perplexity's expansion plans as it seeks to fulfill its ambitions of making search faster, more efficient, and transparent.

Search however is a historically challenging market to break into—many have tried and failed to carve out a significant space in the search engine market dominated by Google. Perplexity will need to not only compete with traditional search incumbents like Google and Microsoft that have already begun offering similar conversational AI integrations into their search engines, but also against foundation model providers like OpenAI that now have web browsing capabilities into their technology.

Srinivas stated, "We stand at the inflection point of a massive behavioral shift in how people access information online. I am excited about the potential for Perplexity to enhance our curiosity and intelligence."

While competing with Google's dominance presents monumental challenges, Perplexity's backers see its generative AI approach as the future of search. IVP General Partner Cack Wilhelm noted, “If this works, it could eventually be really big.”

Chris McKay is the founder and chief editor of Maginative. His thought leadership in AI literacy and strategic AI adoption has been recognized by top academic institutions, media, and global brands.

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