Report: AI Search Company Perplexity Aims to Raise $500 Million

Artificial intelligence (AI) search company Perplexity is reportedly looking to raise about $500 million in a new funding round that would value it at $8 billion.

The company has mentioned these figures in talks with investors, though the terms could change and the funding might not come together, The Wall Street Journal (WSJ) reported Sunday (Oct. 20), citing unnamed sources.

Perplexity did not immediately reply to PYMNTS’ request for comment.

The reported potential funding round would be the company’s fourth in a year and would more than double its valuation, according to the report. It was valued at $520 million in January and $3 billion this summer.

Perplexity’s annualized revenue is about $50 million, up from $10 million in March, the report said, citing the unnamed sources.

It was reported Oct. 2 that OpenAI nearly doubled its valuation, reaching $157 billion, while raising $6.6 billion in new funding. OpenAI was previously valued at $86 billion earlier this year after employees sold shares.

In September, a 3-month-old AI startup raised $1 billion in a funding round. The funding round of Safe Superintelligence (SSI), co-founded by former OpenAI chief scientist Ilya Sutskever, saw participation from NFDG, a venture capital firm run by Daniel Gross and Nat Friedman, alongside tech investment heavyweights Andreessen Horowitz, Sequoia Capital, DST Global and SV Angel.

Perplexity has been making waves in the search engine market with its approach in which its search tools provide users with instant answers to questions, sources and citations, PYMNTS reported in June.

The company uses various large language models (LLMs), including those from OpenAI and Meta’s open-source Llama, to summarize and generate information. It reported over 500 million queries served in 2023, achieved with minimal marketing expenditure.

It was reported in August that Perplexity was preparing to monetize its platform through ads, a move that could reshape competition in the digital ad market.

The company has also faced controversy, with some major media outlets accusing it of plagiarism, raising questions about content ownership and fair use in the AI era. Perplexity adjusted its citation practices and introduced a revenue-sharing model for publishers.