Perplexity AI is reportedly in early discussions to secure between $500 million and $1 billion in funding, potentially doubling its valuation to $18 billion, according to CNBC.
The AI-driven search startup, which competes with industry giants like Google and OpenAI, Microsoft, has experienced rapid growth but faces mounting competition in the AI-powered search market.
The company’s latest funding round follows a December valuation of $9 billion—three times its $3 billion valuation just six months earlier.
Perplexity AI is negotiating to secure $500 million to $1 billion in funding, potentially doubling its valuation to $18 billion. This move highlights the growing confidence in AI technology and its market potential, as reported by CNBC.
Perplexity currently generates nearly $100 million in annual recurring revenue (ARR), highlighting its strong position in the generative AI boom that began with the launch of OpenAI’s ChatGPT in late 2022.
Competitive pressure in AI search intensifies
Perplexity’s rapid rise has put it in direct competition with emerging AI-powered search tools.
On Thursday, AI startup Anthropic introduced a web search feature for its chatbot, Claude, enabling real-time search results for select users.
OpenAI’s ChatGPT also integrated search capabilities last fall, strengthening its position against Perplexity and traditional search engines like Google and Microsoft’s Bing.
Meanwhile, Google’s AI-powered search feature, AI Overviews, faced backlash over notable inaccuracies upon its release.
Venture fund and strategic investments
Beyond expanding its AI search capabilities, Perplexity is also investing in early-stage AI startups.
Earlier reports had suggested the company was close to raising a $50 million venture fund, with Perplexity serving as an anchor investor.
The company’s network of 80,000 developers provides insights into API usage, allowing it to identify promising AI ventures.
Additionally, Perplexity made headlines in January when it proposed a merger with TikTok amid uncertainty over the social media platform’s future in the U.S.
Content controversy and revenue-sharing model
Despite its rapid ascent, Perplexity has faced criticism for allegedly plagiarizing content from media publishers.
In response, the company introduced a revenue-sharing model in July, pledging to distribute a portion of ad revenue to publishers when their content is cited in AI-generated answers.
As Perplexity AI navigates funding talks and intensifies competition, its next moves could significantly shape the future of AI-driven search.
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