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Perplexity, an artificial intelligence-powered search engine aiming to take on Google, is in funding discussions for the fourth time this year, looking to raise up to $1bn at more than double its previous valuation as an investor frenzy for AI start-ups shows little sign of abating.
Weeks after OpenAI sealed one of the largest fundraisings in Silicon Valley history, Perplexity had been overwhelmed by unsolicited interest from new investors, according to multiple people familiar with the situation.
It is now in talks to raise between $500mn and $1bn, which would value the company at $8bn, according to the people.
“The intensity and interest has accelerated” in the past month, said one person familiar with the discussions. OpenAI’s $6.6bn round, which valued the company at $150bn, has set a new ceiling for AI start-ups.
In recent weeks, OpenAI co-founder Ilya Sutskever and “godmother” of AI Fei-Fei Li have separately raised $1bn each for months-old start-ups. OpenAI’s former chief technology officer Mira Murati, who left the company this month, is also in early conversations with investors about raising funds for a new venture, according to a person with knowledge of the matter.
The flurry of fundraising has added to concerns about a bubble forming in the sector, with start-ups that are yet to be profitable burning through billions of dollars to train cutting-edge AI models. One venture capital investor said Perplexity’s mooted valuation was “heady” and had priced out his firm.
The fundraising was first reported by The Wall Street Journal. People familiar with the discussions emphasised that no lead investor had been chosen and nothing had been signed, although it was expected that existing investors would participate in the round.
Perplexity’s current backers include AI chipmaker Nvidia and Amazon founder Jeff Bezos, as well as several prominent names from the AI industry, such as OpenAI co-founder Andrej Karpathy and Meta’s chief AI scientist Yann LeCun.
It has been just a few months since Perplexity closed a $250mn fundraising round that included SoftBank’s Vision Fund 2, said people familiar with the deal. That tripled its valuation to $3bn in June. The company had previously raised funds in January and April of this year.
The San Francisco-based group is seeking to redesign the search ads system pioneered by Google, where marketers bid to have a sponsored link placed against search queries and is in talks with major brands to pilot advertising on its platform.
Run by former Google intern Aravind Srinivas, the start-up’s success will depend on its ability to grow users and navigate complaints from publishers that it is plagiarising their content without permission. The company said 250mn queries were made on its search engine in July, compared with 500mn in the whole of last year.
Perplexity currently makes money through subscriptions and says its annualised revenues — a projection of full-year revenues based on extrapolating the most recent month’s sales — have grown from $5mn in January to $35mn in August.
Perplexity declined to comment on the new fundraising.
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