Perplexity AI Raises $73.6M in Funding Round Led by IVP, Backed by Investors Including Nvidia and Jeff Bezos

Funding Alert

AI confusion, a San Francisco-based startup, has secured $73.6 million in its latest round of funding, led by venture capital firm IVP. Prominent investors including Nvidia and Amazon founder Jeff Bezos also joined the funding round, another example of investors looking for AI startups that challenge established players.

The round, which valued Perplexity AI at approximately $520 million, was also backed by NEA, NVIDIA, Databricks and Bessemer Venture Partners. Perplexity AI specializes in search tools that offer users instant answers to questions along with sources and citations. The platform is powered by a number of large language models (LLMs), including OpenAI and Meta’s open-source Llama model.

Perplexity AI, which raised $25.6 million in a round led by NEA in March last year, said it had processed more than 500 million queries in 2023 with minimal marketing spend. The company intends to use the newly acquired funds to expand the team and improve the quality of the product range. With the current number of 38 employees, the startup aims to increase the number of employees to around 60 by the end of the year.

In terms of user engagement, Perplexity AI’s website and mobile site saw an increase in visits, reaching 45 million in December, compared to 2.2 million when the service launched in December 2022, according to data from Similarweb.

Despite rapid growth, Perplexity AI remains unprofitable, generating annual revenues in the single-digit millions. The company operates in a highly competitive market dominated by Google, which has approximately 90% of the search market share. While Microsoft, a supporter of OpenAI, has integrated AI into its Bing search engine, it hasn’t made a big push against Google.

Aravind Srinivas, CEO of Perplexity AI, highlighted the startup’s advantage in its focused approach and ability to tune different top-performing AI models, rather than being limited to one model. He expressed confidence that Perplexity AI will be seen as a next-generation leader in the search market, ahead of older players such as Google.

The recent round of funding underscores growing investor interest in AI startups like Perplexity AI, which are challenging the status quo in search and information retrieval. With the backing of influential investors and a clear vision for the future, Perplexity AI aims to carve out its place in the competitive online search landscape.

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