Perplexity AI, a startup using artificial intelligence to build competitive search engines Alphabet Co., Ltd.Google has raised about $63 million in a new funding round that values the company at more than $1 billion.
The funding, scheduled to be announced Tuesday, doubles Perplexity's valuation from just three months ago. Investor Daniel Gross led the round, with participation from billionaire Stanley Druckenmiller, Y Combinator CEO Garry Tan, and Figma CEO Dylan Field. Jeff Bezos, founder of Amazon.com Inc. Nvidia Inc. also participated in the round. The Wall Street Journal previously reported that Perplexity was in financing talks.
Founded less than two years ago, Perplexity offers an AI chatbot that summarizes search results, lists answer quotes, and helps users narrow down their queries to get the best answers. Perplexity's focus on accuracy quickly made its chatbot stand out in an increasingly crowded market, earning it fans like Nvidia CEO Jensen Huang, who says he uses the product “almost every day.” . Perplexity has handled more user queries (about 75 million) in the US so far this year than he handled in all of 2023.
Perplexity, which offers free and paid versions of its service, said it generates $20 million in annual recurring revenue. Like many other AI companies, Perplexity is currently looking to grow its revenue by focusing on selling AI services to enterprises. The startup is announcing a new enterprise version of its $40-per-month chatbot with additional features such as stronger security and data protection measures. Bridgewater Associates, Zoom Video Communications Inc, and the Cleveland Cavaliers are among the first group of companies to use the product.
“We want to put Perplexity in the hands of every company in the United States,” Aravind Srinivas, the company's co-founder and CEO, said in an interview.
Perplexity is also looking to expand its user base in other regions. The startup has sales partnerships with his two major telecommunications companies, Japan's SoftBank Corp. and Germany's Deutsche Telekom AG, to sell the service to a total of more than 300 million users around the world. Some of these customers will receive a free one-year subscription to Perplexity.
With 55 employees, the startup remains much smaller and less capitalized than OpenAI, which developed ChatGPT, not to mention Google. But investor and user interest in Perplexity highlights enthusiasm for new generative AI products that reimagine basic internet services like search. Meanwhile, Google is rushing to thoroughly review its artificial intelligence-related products, and is said to be considering charging a fee for search functions that use AI, but this would mean that some of the company's core services This is the first time it has been placed behind a paywall.
Srinivas acknowledged that his company is competing with “big sharks,” but Perplexity's advantage lies in its agility; We design our technology from the ground up with precision in mind. Srinivas said the team frequently updates the app's dataset, collects information from users when the chatbot answers incorrectly, and uses tools like OpenAI's GPT-4, Anthropic's Claude, and Meta's Llama-3. The company says it uses several major models to provide the best answers.
“To get real answers, you need a purpose-built product,” said Gross, an entrepreneur and investor who previously ran AI projects at Apple Inc. and was a partner at Y Combinator. . “Features like citations and getting quality information from trusted sources are things you can do by specializing as a product company rather than trying to be generic.”