Perplexity, the AI search engine startup, is a hot property right now. TechCrunch has learned that the company is currently raising at least $250 million more at a valuation between $2.5 billion and $3 billion.
This news follows two other major fundraising rounds that saw the company’s valuation take a huge leap over the past four months: in January, the company raised nearly $74 million at a valuation of $540 million dollars (compared to $121 million in April 2023). And in early March, the company closed $56 million on a billion-dollar valuation — a raise that has been quietly public since then (it was notably in PitchBook’s database) and that Bloomberg highlighted earlier during the day.
These two reported series do not represent the whole story. We understand from several sources close to the company that it is also organizing a new funding round to capitalize on the attention it is receiving in the market. NEA and IVP, both former backers of the company, are among those looking to invest in this broader round, according to sources.
Whether they or other previous backers participate, one source said, may depend on Perplexity’s willingness to work with existing investors rather than diversity, expanding its cap table to attract new ones. investors.
“They are growing very quickly,” said a partner of an existing investor. “Yes, we will look to participate.”
The core of Perplexity’s product is an AI-powered generative search engine that delivers results using a chatbot-style interface. It’s certainly not the only generative AI company pursuing the search opportunity: It’s basically the number of people using products like Microsoft’s ChatGPT and Bing (powered by OpenAI), and Google is making a big effort to improve research results with his Gemini LLM.
But Perplexity builds its algorithms by integrating a variety of LLMs, the idea being that this produces a more precise and richer answer.
“Unlike other enterprise tools for knowledge work like Microsoft Copilot, Perplexity Enterprise Pro is also the only enterprise AI offering that delivers all of the market-leading core models in a single product: OpenAI GPT-4, Anthropic Claude Opus, Mistral, and more to come,” CEO and co-founder Aravind Srinivas note earlier today. “This gives customers and users the choice to explore and personalize their experience based on their use cases.” This “more to come” may well include more of Hugging Face and Meta, if Srinivas’ opinion public approvals and the investor lists are completely valid.
Given that the company has only been around since 2022, Perplexity’s current list of investors is already long, numbering 46 names according to PitchBook data.
Besides IVP and NEA, it includes other notable venture capital firms such as Sequoia, Bessemer and Kindred; strategic backers like Nvidia, Databricks and Bezos Expeditions; and many recognizable figures such as Jeff Bezos, Meta’s Chief AI Scientist Yann LeCun, Naval Ravikant, Susan Wojcicki, Elad Gil, Nat Friedman, and Hugging Face’s Clément Delangue. A new backer, Daniel Gross, led the $56 million funding round starting in March with other new backers Stanley Druckenmiller, Y Combinator director Garry Tan and Figma CEO Dylan Field , who also participated, among others.
One fundraiser quickly following another is not unlike the ongoing fundraising we’ve seen from other big startups over the years. In the years leading up to its IPO, at a time of rapid growth and intense attention, Snap seemed to be steadily raising money on a continuous basis. These days, it seems like everything is about AI, with companies like OpenAI, Anthropic, and Mistral all growing at a rapid rate and seeing their valuations skyrocket at the same time.
In the case of Perplexity, the startup stands out in the market for several reasons. Clearly, this is one of the ambitious, albeit smaller, hopes in the race to create generative AI services. Its unique position in the market is that it is not focused on the race to build large, general-purpose language models. Instead, taking a page from one of the biggest tech companies in the world today, it’s tackling one specific product, at least for now: search.
Perplexity is not the only startup in the AI space that is leveraging highly targeted opportunities and targeting businesses. Synthesia in the UK is taking a similar approach with AI video tools, aiming them specifically at the enterprise market, for creating training and customer support video content.
In the case of Perplexity, the startup offers its tools on free and professional, paid tiers, and so far it has processed 75 million requests this year and currently enjoys an ARR of $20 million, according to Bloomberg .
His reason for resurrecting so soon? Yes, perhaps to capitalize on customer and investor interest in what one investor described as a “zeitgeist moment” for the startup. But also because of the current mechanisms for creating any type of AI service.
“VSThe calculation is very expensive, so they may have to increase it” for that reason alone, one said.
We have reached out to Srivinivas for comment and will update this article as we learn more.
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